NEW YORK -- Shares of Allscripts Healthcare Solutions Inc. continued to rise Monday as Wall Street evaluated a report that the electronic health records company may sell itself to a private buyer.
THE SPARK: Bloomberg News reported Friday that Allscripts is considering a sale and had engaged Citigroup Inc. as it considered its options. Bloomberg reported that the Chicago company is having discussions with The Blackstone Group and other private equity firms. Allscripts declined to comment on the story.
On Monday analysts offered widely different interpretations of the state of Allscripts and what kind of price the company might be able to fetch from a private equity firm.
THE ANALYSIS: Sterne Agee analyst Greg Bolan said he thinks Allscripts could be sold for $15 to $19 per share in a leveraged buyout. He said going private would be a "suitable course of action for the company" because its share price has fallen sharply and the stock has missed out on a rally in the broader market over the last few months.
Prior to Friday's jump, Allscripts shares were down 50 percent from their annual high of $21.66 and had lost 32 percent of their value since late April. On April 26, the company reported disappointing first-quarter results and cut its annual guidance, and also announced a leadership shake-up: Allscripts said Chairman Phil Pead had been fired and three other board members were resigning, and Chief Financial Officer Bill Davis was also leaving the company.
Bolan said Allscripts faces tough competition from Cerner Corp. and privately held competitor Epic Systems, and it may need to ramp up its research and development to remain competitive. Wall Street might disapprove of that course because it could hurt the company's net income over the short term.
He maintained a "Buy" rating on Allscripts shares and raised his price target to $15 per share from $13.50.
Jefferies & Co. analyst David Windley supported the reasoning behind a potential sale and said the company might be a target for private equity, but is unlikely to be sold to a competitor.
"Allscripts appears to be seeking shelter from public market scrutiny while it slogs through a critical product release," he wrote. "The timing might also suggest some further slippage in bookings and/or the timing of the pending software releases."
Windley kept a "Hold" rating and a price target of $10.50 per share.
Cowen and Co. analyst Charles Rhyee upgraded shares of Allscripts to "Outperform" from "Neutral," saying the stock could trade significantly higher if the company can turn its recent progress into bookings growth in 2013.
"Putting a potential leveraged buyout aside, the underlying fundamentals are starting to improve," he wrote.
THE STOCK: Allscripts shares gained 50 cents, or 4 percent to $12.92 in afternoon trading. The stock rose 14.2 percent on Friday.