(Athenehealth story updated for trading gains, analyst commentary on Athenahealth)NEW YORK ( TheStreet) -- Athenahealth, the health care information technology provider, is up 20% in early trading on Friday and quickly surpassed one million shares traded, versus an average daily trading volume of 700,000 shares. Athenahealth has been a controversial stock in recent trading, diving after its last earnings report when sales and marketing expenses skyrocketed and did not translate into any earnings pop. Athenahealth shares closed at $22.06 on Thursday and its early gain of more than 20% on Friday had shares up more than $5. Athenahealth's 52-week low of $21.51 was reached just this Monday. Athenahealth earned 12 cents on revenue of $58.6 million in the second quarter, versus a Street consensus of 10 cents. It was behind the Street by two cents on a GAAP basis. The Street had revenue just a bit higher, at $59 million, however, Athenahealth had $1 million in revenue that is being pushed over to the third quarter. Athenahealth also provided a bullish outlook -- though that's nothing new for the health care information company, which had been projecting as high as 40% growth in EPS and revenue earlier in the year. Athenahealth expects third quarter revenue of at least $63.3 million and 2010 revenue of $247.6 million to $249.5 million. The current Street consensus estimate is revenue of $61.9 million for the third quarter and $244.6 million for the year. Athenahealth shares have been heavily shorted as health care bears doubted that the company would be able to make a successful transition to the electronic records business that is receiving huge support from federal reimbursements to hospitals and doctors that make the switch to electronic records management. "I'm surprised by the magnitude of the upside. I think there is a short squeeze going on, more so than investors suddenly having conviction on the stock," said Anthony Vendetti, analyst at Maxim Group, though he said Athenahealth did deserve some credit for improvements made in the quarter, particularly with cross-selling in its three main products.
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