Dougherty & Co Upgrades Healthways (HWAY) to Buy
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Dougherty & Co upgraded Healthways (NASDAQ: HWAY) from Neutral to Buy with a price target of $20.00.
Analyst Brooks O'Neil said, "We are upgrading the stock from Neutral to Buy with a $20 PT (26% upside to target) as we see improved visibility on performance for 2014 and the risks related to 4 large contract renewals at the end of 2014 (which could impact 2015 results) have clearly diminished. We still believe the earning power of the business far exceeds its current level and we think the presence of the agitator group (now with 3 board seats) has put incremental pressure on management to deliver solid results this year. Our thinking has evolved over the past few months to include a realization that there is limited downside and potentially positive upside here. Our $20 PT is based on the assumption that investors will put a 12x EV/adj. EBITDA multiple on our new 2015 forecast as the company continues to make progress in strengthening performance."
Shares of Healthways closed at $15.82 yesterday.
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