Story updated at 9:50 a.m. to reflect market activity.
Shares of athenahealth fell 3.5% to $140.53 in morning trading.
The firm set a price target of $145 for the healthcare IT company. According to Jefferies analysts new catalysts for athenahealth include strong small group bookings and new Enterprise Coordinator partners.
Separately, TheStreet Ratings team rates ATHENAHEALTH INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ATHENAHEALTH INC (ATHN) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and premium valuation."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 47.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for ATHENAHEALTH INC is rather high; currently it is at 66.40%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 7.66% is above that of the industry average.
- Powered by its strong earnings growth of 112.50% and other important driving factors, this stock has surged by 54.96% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Health Care Technology industry and the overall market on the basis of return on equity, ATHENAHEALTH INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full analysis from the report here: ATHN Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.