One of the summer's great momentum stocks,
(HCIA:Nasdaq) may be poised to resume speed.
added the firm to its focus list, and the company made an upbeat presentation Wednesday at the
Medical Industry conference in New York City this week. (Both Alex. Brown and Robertson Stephens have participated in the underwriting of shares of HCIA.) Hedge fund buyers have started sniffing around the stock again, and after several weeks of weakness, HCIA, a manager of medical information databases, has started edging higher.
On October 1 HCIA slid nearly 50% to 32 7/8 in one of the great momentum exodus debacles of the year. At the time, the company warned analysts that earnings performance would not meet expectations. Instead of a 29 cents per share net income for the third quarter, the company said the numbers would look more like 10-to-15 cents per share. Since that time, HCIA has battled to regain Wall Street's confidence--without much success. Wednesday, HCIA closed up 7/8 to 31 +.
But HCIA, chastened by Wall Street's stern rebuke, says it has made the correct moves to put its growth ship back on track. HCIA Chief Executive Officer George Pillari has expressed contrition in recent weeks at various investor conferences. And on Wednesday he told
that a recent management restructuring, which decentralizes some key sales responsibilities over three branches, will allow HCIA to respond more quickly to client needs.
Pillari added that the company already has an excellent record with client retention, with 90% of its customers returning for more business. In addition, Pillari said HCIA will soon expand its service in health-care consulting with a fixed-rate service. In addition, Pillari said that it is succeeding at fully digesting the 16 companies it purchased in the past four years.
"The fundamentals are in place or being put in place over the next five quarters,'' says Michael Samols, an analyst at Robertson Stephens. "On my coverage list, HCIA is the best stock."
By Andrew Morse