Weak On High Volume: 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.

Trade-Ideas LLC identified AthenaHealth ( ATHN) as a weak on high relative volume 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 $38.3 million.
  • ATHN has traded 65,055 shares today.
  • ATHN is trading at 2.27 times the normal volume for the stock at this time of day.
  • ATHN is trading at a new low 3.02% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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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 14 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 514,600 shares per day over the past 30 days. AthenaHealth has a market cap of $4.7 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.88 and a short float of 47.4% with 35.32 days to cover. Shares are down 15.6% 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 increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • ATHN's revenue growth trails the industry average of 43.8%. Since the same quarter one year prior, revenues rose by 26.6%. 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 60.87%. 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 -4.27% is in-line with the industry average.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Health Care Technology industry average, but is greater than that of the S&P 500. The net income has decreased by 9.6% when compared to the same quarter one year ago, dropping from -$8.06 million to -$8.83 million.
  • Net operating cash flow has declined marginally to $12.92 million or 8.11% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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