Leerink Partners Cuts price Target as Computer Programs & Systems (CPSI) Encounters Headwinds
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Leerink Partners reiterated a Market Perform rating on Computer Programs and Systems (NASDAQ: CPSI), and cut the price target to $26.00 (from $45.00), after updating estimates. CPSI and Healthland are facing significant headwinds. Legacy CPSI bookings declined to 15.8M in 2Q16 from an average of ~$19.4M per quarter in 2015. This decline reflects a slowdown in the market and share attrition. Leerink cut 2016 EPS estimates from $3.00 to $2.01, which is below the consensus of $2.15.
Analyst David Larsen commented, "We are publishing an updated model for CPSI. While the company has acquired Healthland, we are cautious on CPSI and its ability to win significant share in 2016 and 2017. We continue to view the acquisition of Healthland as being one of necessity by both parties. We do believe management will be able to realize significant cost synergies; however, we think that the company will struggle long term in delivering earnings growth. We view the removal of guidance to be due mainly to the volatility in non-recurring business and an indication of challenged fundamentals. We maintain our Market Perform rating on CPSI."
Shares of Computer Programs and Systems closed at $25.82 yesterday.
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