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EMIS has fallen too far, says house broker Numis Securities

CEO Andy Thorburn is focused for now on improving underlying operating procedures and performance, including a focus on the replacement GP systems contract for England, now perhaps 15-18 months away
Doctor's surgery
The service issues with NHS Digital resulted in a provision of £11mln in the 2017 results

Numis Securities has turned bullish on EMIS Group PLC (LON:EMIS) now the healthcare software firm's shares have fallen a fifth this year.

The software firm's nominated adviser admitted that today's full-year results were largely as trailed in January's trading statement, although as a consequence of slightly higher-than-expected guidance on costs Numis has trimmed its 2018 earnings per share forecasts by 2%.

READ: EMIS Group shares tumble 15% as it is hit by contract delays

The shares are now “too cheap”, although Numis concedes there is still much to do to reinvigorate growth.

The house broker's recommendation has moved to 'buy' from 'hold', although the price target has been slashed to 880p from 1,000p, reflecting the dismal share price performance in 2018.

The shares currently trade at 792p, up 10% on the day.

“The three key areas of focus for management for now are:

  1. Preparation for the key England GP's system replacement contract, which now looks likely during 2019 (we look for buyer focus to be on enabling new models of care, reducing overall NHS cost and improving service, rather than price, but perceived risk will remain);
  2. An upgrade to the group's core EMIS Web clinical management system, modernising it and making it more flexible;
  3. Resolution of the service level issues, working collaboratively with the customer,” Numis stated.

In the background management is working on detailed plans for growth, EMIS's Nomad revealed.

“While we see some risk of investor impatience for growth plans, we think that Andy Thorburn's approach is entirely appropriate and will help to build investor confidence in due course,” it concluded.

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