NEW YORK (TheStreet) -- Shares of Computer Programs & Systems (CPSI - Get Report) are falling sharply in pre-market trading on Thursday.
Keybanc Capital Markets (KEY - Get Report) downgraded its rating to "underweight" from "hold."
In a research note this morning, the firm said it believes competition in the small hospital market may be intensifying.
TheStreet Ratings team rates COMPUTER PROGRAMS & SYSTEMS as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate COMPUTER PROGRAMS & SYSTEMS (CPSI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 33.67% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CPSI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- COMPUTER PROGRAMS & SYSTEMS has improved earnings per share by 9.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, COMPUTER PROGRAMS & SYSTEMS increased its bottom line by earning $2.96 versus $2.72 in the prior year. This year, the market expects an improvement in earnings ($3.25 versus $2.96).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Health Care Technology industry average, but is less than that of the S&P 500. The net income increased by 11.1% when compared to the same quarter one year prior, going from $6.94 million to $7.72 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.4%. Since the same quarter one year prior, revenues slightly increased by 5.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- CPSI has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.65, which clearly demonstrates the ability to cover short-term cash needs.
- You can view the full analysis from the report here: CPSI Ratings Report