Saying the company's core growth rate simply doesn't justify its stock price, Brean Murray analyst Bret Jones this morning launched coverage of Emdeon with a 'sell' recommendation and a price target some 20 percent below where the shares closed Tuesday.

Jones, who also covers Emdeon competitor Cerner and upstart payment intermediary athenahealth, says Nashville-based Emdeon's clearinghouse model is "a melting platform" threatened by new competitors and the emergence of health information interchanges, which are in line to receive plenty of stimulus-related cash. In addition, Jones writes, Emdeon's cross-selling strategy is hamstrung by the fact that, as an intermediary, it does not focus directly on either the provider or payer markets.

"Maintaining share of claims processed will be increasingly more difficult as providers bypass clearinghouses and submit their claims directly to the payers," Jones wrote. "The multiple afforded the shares is more commensurate with a company capable of delivering double-digit top-line growth."

Emdeon, Jones added, is not such a company and should thus merit a lower valuation. His fair-value estimate of the stock is $12.70, a number he added could rise to about $14 if meaningful health reform adds millions of uninsured people to the system.

"The shares have benefited from being characterized as a healthcare IT company," Jones wrote. "However, only the company's [revenue cycle management] business clearly falls into the traditional healthcare IT universe and that business accounts for less than 20% of the company's revenue."

Since going public with an opening-day pop a month ago, Emdeon shares (Ticker: EM) have lagged the S&P 500 by almost 10 percent. At about 11:20 a.m., they were down more than 2 percent to $16.36.