Auriga Initiates Coverage on athenahealth (ATHN) with a Hold; Valuation Seems to Reflect Optimistic Outlook

June 11, 2009 8:12 AM EDT

Auriga initiates coverage on athenahealth (Nasdaq: ATHN) with a Hold. Price target $32.

Auriga analyst says, "athenahealth offers physicians a unique web-based approach to practice management based on a software-as-service delivery model and a substantial service component in which doctors essentially outsource their billing function to the Company. athena is on a steep growth curve, increasing its top-line by 30%+ and its adjusted EPS by 40% owing to operational leverage. The system’s low-to-no upfront investment is particularly attractive to physicians, who are struggling to maintain income levels amid increasing patient loads and declining reimbursement. As athenahealth gets paid on a percentage of cash collections, the Company may face challenges as the current recession is driving an increase in Medicaid and the uninsured population (30 million in 2000 vs. 48 million today – source: US Census Bureau). Trading at a premium multiple to the broader health IT group but in line with our expectation for forward earnings growth (38%), we view the shares as appropriately valued but would be opportunistic on dips as the high-growth and recurring revenue characteristics of the model appear favorable for long-term investors."

To see more analyst ratings on ATHN Click Here.

athenahealth, Inc. engages in the provision of Internet-based business services for physician practices in the United States.

Related Categories

New Coverage

Stocks Mentioned

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?