What Happened?
Shares of healthcare staffing company AMN Healthcare Services (NYSE: AMN) fell 0.9% in the afternoon session after investors looked past a third-quarter earnings beat and focused on significant year-over-year declines in revenue and profits.
The healthcare staffing company's revenue was $634.5 million, down 7.7% from the prior year. While its adjusted earnings per share of $0.39 easily surpassed analyst estimates, it marked a sharp drop from $0.61 in the same quarter last year. The negative market reaction appeared to be driven by deteriorating underlying business trends, as sales volumes fell 10.6% year-over-year, signaling weakening demand. Furthermore, the company's free cash flow margin, a key measure of cash generation, contracted to 3.6% from 6.9% a year ago. AMN's guidance for the fourth quarter also pointed to continued challenges, with management forecasting a 1.7% year-over-year revenue decline, reinforcing concerns about the demand environment.
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What Is The Market Telling Us
AMN Healthcare Services’s shares are extremely volatile and have had 34 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 25 days ago when the stock gained 3.2% on the news that Truist Securities reiterated its "Buy" rating and increased its price target on the company's stock. The firm's analyst, Tobey Sommer, lifted the target by 20% to $24.00 from a previous $20.00. This adjustment pointed to a positive outlook on the company's future performance. The move provided a notable point of optimism, especially when viewed against the wider analyst consensus which had previously set an average price target of $20.00 for the stock.
AMN Healthcare Services is down 23.7% since the beginning of the year, and at $18.72 per share, it is trading 54.3% below its 52-week high of $40.92 from November 2024. Investors who bought $1,000 worth of AMN Healthcare Services’s shares 5 years ago would now be looking at an investment worth $300.10.
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