UPDATE: UBS Starts Computer Programs and Systems (CPSI) at Buy; Earnings Power Underappreciated by Investors

(Updated - August 24, 2012 9:44 AM EDT)

UBS initiates coverage on Computer Programs and Systems (NASDAQ: CPSI) with a Buy. PT $61.00.

Analyst, Stephen Shankman, said, "CPSI provides internally developed and fully integrated HCIT solutions to the small hospital market (including CAH), which remains widely underpenetrated and possesses favourable HITECH related reimbursement characterstics...Meaningful Use (MU) attestations lead the pack by a large margin...CPSI's nearly $10 mil of deferred revenue related to MU installment payment plans has the potential to add $0.45-$0.50 to EPS, largely in 4Q12, and leads to our above consensus 2012e EPS. We believe many investors are still coming to terms with this new payment paradigm. Looking out, we see leverage on a number of expense lines contributing to 400 bps of EBITDA margin expansion thru 2016."

For an analyst ratings summary and ratings history on Computer Programs and Systems click here. For more ratings news on Computer Programs and Systems click here.

Shares of Computer Programs and Systems closed at $46.79 yesterday.

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