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Sustaining 30% Bookings Growth Key To Athenahealth's Stock

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Sustaining 30% Bookings Growth Key To Athenahealth's Stock

Piper Jaffray reiterated its Overweight rating and $174 price target on athenahealth, Inc (NASDAQ: ATHN), saying that sustaining the 30 percent bookings target is key to the stock.

"Bottom line, the company is more confident today in achieving their 30 percent annual bookings target this year than when they gave the guidance at their analyst day in December, despite the fact that bookings growth fell short of the 30 percent target in Q1," analyst Sean Wieland wrote.

Wieland noted the first-quarter bookings shortfall was "self-inflicted" and attributed it to small-group reshuffling.

Related Link: Athenahealth Announces Acquisition Of Arsenal Health; Terms Not Disclosed

However, the analyst highlighted that the small group market opportunity remains strong, and "ATHN continues to offer a comparative advantage in this market where they still only have 5 percent market share. They enjoy a 50 percent close rate in group."

Wieland said Athena would benefit from its new specialized sales model under which it will focus only on a specific discipline (for example, orthopedics) in a wider geographic territory. Further, the merging of Athenanet with its own corporate website should improve lead generation.

The analyst also highlighted the company's opportunity from Population Health, as it "is the gateway drug toward Athenahealth."

"When management factored in the Population Health opportunity into guidance, they did not even consider the opportunity to sell their PopHealth platform into the Epic base, but the Providence deal (announced on the Q1 call) changes that assumption," Wieland elaborated.

"Deal size of $0.50–$1.00 per member per month (PMPM) is also more favorable than initial estimates (and highly profitable)," the analyst added.

At time of writing, Athena was down 0.50 percent on the day, trading at $130.48.

Latest Ratings for ATHN

DateFirmActionFromTo
Dec 2018MaintainsEqual-WeightEqual-Weight
Nov 2018DowngradesOutperformMarket Perform
Nov 2018MaintainsHoldHold

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