The Street Could Be Underestimating Tailwinds For Press Ganey Holdings

Baird’s Matthew Gillmor believes that Press Ganey Holdings Inc PGND “is benefiting from broader growth drivers than simply CAHPS mandates, most notably the ongoing shift towards patient-centric care, and the rise of consumerism.”

Gillmor maintains an Outperform rating on the company, while raising the price target from $37 to $43.

Underappreciated Tailwind

The analyst believes the CAHPS mandates scheduled for several healthcare subsectors in 2017–2018+ are likely to provide a 15–20 percent tailwind for Press Ganey.

While the company is “much more than a CAHPS-driven story,” Gillmor believes these pending mandates were a potential source of growth and underappreciated by the Street.

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Gillmor also believes the estimates could prove conservative, based on two reasons.

“First, we assume 50–75 percent of these providers already perform CAHPS surveys. Second, we assume pricing of $10,000–$15,000 per facility, which we believe is below average and does not assume any contribution from census-based surveying,” the analyst explained.

Gillmor expects the CAHPS tailwind to be spread over several years.

At time of writing, Press Ganey was down 1.347 percent on the day, trading at $38.02.