Needham & Company Cuts Price Target on HealthStream (HSTM) to $28 Following 3Q
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Needham & Company maintained a Buy rating on HealthStream (NASDAQ: HSTM), and cut the price target to $28.00 (from $32.00), following the company's 3Q earnings report. HSTM’s workforce solutions segment grew 4.6% Y/Y, driven by elevated demand for the resuscitation suite which continues to exceed internal expectations. Revenues were negatively impacted by customers switching to a lower cost e-survey product versus the higher cost telephony based survey.
Analyst Scott Berg commented, "HSTM's 3Q call highlighted a company whose sales execution is above expectations but product transitions and implementation delays should pressure FY17 revenue growth. Workforce Solutions segment commentary, its largest by revenue, remains above expectations, led by its Resuscitation product. However, two top five customers began switching from HSTM's high-cost telephony surveys to lower cost e-surveys with higher margin, and this transition period could pressure revenue growth through 4Q17. Coupled with implementation delays in Provider Solutions (which have sold well), we are reducing our FY17 revenue estimates by $7mm to reflect the near term optics. While we continue to like the business and laud recent sales execution, we reduce our PT to $28, believing the reduced growth assumptions pressure valuation in the near-term."
Shares of HealthStream closed at $24.10 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst PT Change
Related EntitiesNeedham & Company, Earnings
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