The odds that Athenahealth will take a hit to its revenue because of the potential loss of a partnership have faded, according to Sterne Agee, which upgraded shares of the electronic health record and medical practice management company.
Analyst Greg T. Bolan hiked his price target Monday to $72 from $48.50. The analyst said his concerns about major revenue "air pockets" hitting the Watertown, Mass., company next year have lessened.
In October, prescription drug distributor McKesson Corp. said it would spend about $1.46 billion to buy medical product and service distributor PSS World Medical Inc.
Bolan initially believed a partnership between Athenahealth and PSS would end once the deal was completed. But he said he now believes McKesson will still allow the PSS sales force to sell Athenahealth or McKesson products.
Bolan raised his forecast for 2013 revenue to $537 million from $523 million. He also lowered his earnings per share expectation for next year by a penny to $1.24 due to growing pressure on profitability, but raised his rating on the company's shares to "underperform" from "neutral."
Analysts, on average, expect earnings of $1.23 per share on $538.2 million in revenue next year, according to FactSet.
Athenahealth Inc. said last week it expects to earn $1.15 to $1.25 per share for 2013 on revenue of $525 million to $550 million.