AMN Healthcare: Raising FVE to $115 After Incorporating Recent Performance

We are raising our fair value estimate on narrow-moat AMN AMN to $115 per share, up from its previous $102. This comes as we roll our model and incorporate slightly higher travelers on assignment, revenue per day, and non-staffing revenue than forecasted previously.

The lift to our fair value estimate largely stems from better-than-expected top-line performance in the most recent two quarters. AMN showed flat growth in the first quarter despite an industry-wide decline in temporary staffing demand. We think this represents a delay to our overall forecast rather than change of direction. Management confirmed that it expects to see reductions resume next quarter across bill rate and volume, bottoming out in the third quarter. Nevertheless, incorporating this delay in timing impacts our fair value estimate.

We have maintained our long-term outlook that a material nursing shortage will last until around 2029 due to resignations and bottlenecks in training. Also, we have an economic slowdown modeled for 2023 to 2024, which may not play out entirely as modeled, but we think simulated cyclicality is necessary for a prudent forecast, with timing being a secondary concern.