New Lifetime High Reached: AthenaHealth (ATHN)

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.

Trade-Ideas LLC identified AthenaHealth ( ATHN) as a new lifetime high 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 $227.2 million.
  • ATHN has traded 14,899 shares today.
  • ATHN is trading at a new lifetime high.

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More details on ATHN:

2004 revenues $38.9MM. 2005 revenues 63MM. 433 employees. ATHN has a PE ratio of 2588.3. Currently there are 7 analysts that rate AthenaHealth a buy, 3 analysts rate it a sell, and 12 rate it a hold.

The average volume for AthenaHealth has been 611,000 shares per day over the past 30 days. AthenaHealth has a market cap of $6.8 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.66 and a short float of 32.6% with 7.68 days to cover. Shares are up 34.7% 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, 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 ratings report include:
  • The revenue growth greatly exceeded the industry average of 7.4%. 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 109.01% 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.

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