AthenaHealth (ATHN) Is Water-Logged And Getting Wetter Today

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.

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 $72.5 million.
  • ATHN has traded 450,502 shares today.
  • ATHN traded in a range 227.2% of the normal price range with a price range of $10.40.
  • ATHN traded below its daily resistance level (quality: 21 days, meaning that the stock is crossing a resistance level set by the last 21 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, operates as a business services company that provides ongoing billing, clinical-related, and other related services to medical group practices and health systems in the United States. Currently there are 13 analysts that rate AthenaHealth a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for AthenaHealth has been 467,500 shares per day over the past 30 days. AthenaHealth has a market cap of $4.9 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.89 and a short float of 40.8% with 17.45 days to cover. Shares are down 12.8% 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, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • ATHN's revenue growth has slightly outpaced the industry average of 22.2%. Since the same quarter one year prior, revenues rose by 24.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for ATHENAHEALTH INC is rather high; currently it is at 65.63%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 4.09% trails the industry average.
  • Net operating cash flow has increased to $44.96 million or 21.18% when compared to the same quarter last year. Despite an increase in cash flow, ATHENAHEALTH INC's cash flow growth rate is still lower than the industry average growth rate of 61.44%.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Health Care Technology industry average. The net income has significantly decreased by 33.6% when compared to the same quarter one year ago, falling from $13.15 million to $8.73 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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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