Here's Why You Should Hold on to athenahealth (ATHN) for Now
athenahealth, Inc. ATHN has topped estimates in the trailing four quarters. For the quarters ahead, the company is expected to gain from its solid focus on cloud-based services and a raised guidance for 2018. However, cutthroat competition might pose a threat.
In the past year, the Zacks Rank #3 (Hold) stock has rallied 1.2% against the industry’s decline of 8.9%. However, the current level is lower than the S&P 500 index’s rise of 9.3%.
The stock currently has a Growth Score of A. This reflects possibilities of outperformance over the long haul. Our research shows that stocks, with a Growth Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), are better picks than most.
Here we take a quick look at the major headwinds confronting athenahealth and discuss the factors that ensure near-term recovery.
What’s Deterring the Stock?
athenahealth’s EHR (Electronic Health Record) solution faces significant competition from the likes of Allscripts Healthcare Solutions MDRX and others.
Healthcare bigwigs such as Cerner Corporation CERN offer long-standing seamless products, integrating inpatient and ambulatory-care systems. In fact, Cerner is one of the only two EHR vendors that are gaining market share in the mid- to large-hospital segment.
Why Should You Retain athenahealth?
Focus on Big-Data Based EHR Services
athenahealth is a key player in the HCIT (Healthcare IT) space. The company’s cloud-based big data network — athenaNet — deserves a special mention here. Per management, there are nearly 116,000 providers on athenaNet currently.
Other notable platforms include athenaClinicals, the company’s first economically sustainable, service-based electronic medical records (EMR) system and athenaCollector.
By the end of the first quarter of 2018, management at athenahealth confirmed that it has been recognized as the number one acute care EMR keeper for community hospitals.
For 2018, athenahealth expects revenues in the range of $1.34-$1.37 billion, up from the previous guidance of $1.31-$1.38 billion.
The company expects adjusted operating income in the range of $244-$270 million, up from previous guidance of $210-$235 million.
athenahealth, Inc. Price and Consensus
athenahealth, Inc. Price and Consensus | athenahealth, Inc. Quote
Which Way Are Estimates Treading?
For the ongoing quarter, the Zacks Consensus Estimate for earnings is pegged at 98 cents, reflecting a year-over-year increase of 75%. The same for revenues is pegged at $336.8 million, showing an increase of 10.6% from the previous year.
For the full year, the Zacks Consensus Estimate for revenues is pinned at $1.35 billion, reflecting an increase of 10.5% from the prior year. The same for earnings stands at $4.19, indicating growth of 69% from the previous year.
A better-ranked stock in the broader medical space is Intuitive Surgical ISRG.
Intuitive Surgical has an expected long-term earnings growth of 14.7%. The stock carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
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