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Athenahealth, Inc. (ATHN) Message Board

  • georgespelvin@rocketmail.com georgespelvin Feb 6, 2013 1:59 PM Flag

    Comparison ATHN, Allscripts, Cerner

    Useful comparison. Cerner is very successful with a market cap four times the size of Athena. Allscripts has had major issues which came home to roost after the glow of the acquisitions dimmed, and is about two thirds the market cap of Athena.

    I am just looking now at the stock parameters, not discussing the companies. Just the stock.

    Company P/E Forward P/E P/EG P/S Mrkt Cap

    ATHN 176 72 3.5 7.95 $3.2 B
    CERN 39 30 1.7 5.7 $14.5 B
    MDRX (Allscripts) 39 13 1.0 1.2 $1.8 B

    There is a lot you could say about the companies. Cerner is gaining traction. Athena is gaining traction. Allscripts is not so much losing clients as suffering a loss of growth amid widespread internal issues.

    But they are all, more or less, in the same business.

    Which would you buy? Which, if you have the stomach for shorting, would you rather short?

    If I could buy Epic I would buy that. But I can't. It is not public. She did not go public because she did not need the money to operate her business and she did not want to get out. And if she did need money, because she believed in what she was doing, she borrowed it. Interestingly Epic is cleaning up. They are eating the lunch of IDX (now owned by GE).

    Look at Apple. I realize it seems like a fatuous comparison. But it sells for a P/EG of 0.51 and a forward P/E of 9, with about 25% of its share price in cash. Its share price has plummeted by 35%, just as Athena did. But to what levels in terms of the share price financial parameters as compared to Athena? And why? Because it missed its whisper numbers. Not the numbers it projected. Clearly the reason for that is that it is over-owned by the retail public that manages their own investments and they are the people who buy high and sell low.

    The thing that keeps Athena from dropping through the floor is the institutional ownership. It is almost exclusively owned by them. They don't lose sleep. They don't buy and sell at 9:31AM. They buffer the moves. Until they finally start to move and then watch out. They do not tend to buy in short squeezes. they are not traders. Those moves, even dramatic ones, in stocks like this, are usually on small volume compared to the number of shares outstanding. Institutions buy for longer time frame reasons and sell for longer time frame reasons.

    it will be interesting to see the ATHN numbers and the reaction to them. if they are deemed good they will not buy more. How could they? They have almost all the shares. The ironic fact is that if the numbers are good or they are bad, either case may cause them to reduce their position, as did T. Rowe Price. If they are good they might sell to take some risk off the table and if they are bad they might sell to limit further erosion.

    In either case they have to do it gingerly. They are not like kids and retirees who panic and sell out in one morning. They can't. T. Rowe Price obviously sold last quarter when the stock price plummeted from $90 to $58 and back up to $75. Institutions are not looking for roller coaster rides. They are not looking for killings. They are not hedge funds. Last quarter was eye-opening to them. They are watching, intently.

    If you were to require the same P/EG for Athena that you get with Cerner, the Athena share price would be $42. And Cerner is a company whose prospects are in far less doubt than Athena's.

    Sentiment: Strong Sell

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