Athenahealth (ATHN) Shows Signs Of Being Water-Logged And Getting Wetter

Trade-Ideas LLC identified athenahealth (ATHN) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

athenahealth

(

ATHN

) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified athenahealth as such a stock due to the following factors:

  • ATHN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $42.7 million.
  • ATHN has traded 1.3 million shares today.
  • ATHN traded in a range 207.8% of the normal price range with a price range of $5.93.
  • ATHN traded below its daily resistance level (quality: 156 days, meaning that the stock is crossing a resistance level set by the last 156 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on ATHN:

athenahealth, Inc., together with its subsidiaries, provides cloud-based services and mobile applications for medical groups and health systems. The company provides services through athenaNet, a cloud-based platform. ATHN has a PE ratio of 243. Currently there are 10 analysts that rate athenahealth a buy, 3 analysts rate it a sell, and 6 rate it a hold.

The average volume for athenahealth has been 363,500 shares per day over the past 30 days. Athenahealth has a market cap of $5.4 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.71 and a short float of 28.9% with 22.82 days to cover. Shares are down 14.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates athenahealth as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 1.9%. Since the same quarter one year prior, revenues rose by 24.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.55, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, ATHN has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Health Care Technology industry and the overall market, ATHENAHEALTH INC's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $8.31 million or 35.73% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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