Wolfhounds

Quality Systems Has Just What the Doctor (and Dentist) Ordered

There's more than the valuation problem. For fiscal 2009, especially the last 2 quarters, revenue growth has been more than double net income growth. During the first quarter, in an statement not well disguised, the company lowered it's prices do to economic conditions. This might be expected for the costly NexGen system, but even the smaller practice online version was reduced.

By the time the economy recovers and Obama's plan gets funded in 2011, there will be plenty of competition. That could mean continued erosion of margins. QSII will likely remain a high quality player, but it's days of high flying market performance may be over.

Quality Systems' Management Is Clearly Confident

QSII has been growing without interruption for over 10 ten years. It has never had much debt during that period and it's margins, ROE, and ROI are enviable. The author is correct to point out that the last 5 years have seen acceleration of business and QSII is the most innovative company in it's industry. I would not be surprised to see continuing earnings acceleration given the political retoric to reduce costs. However, I am continually amazed when analysts get it right, they still try to predict a stock's price range. That's what we have a stock market for.