Two Avondale Partners managing directors and a senior analyst have left the locally based company for global firm Canaccord Genuity, which also has recruited a former Morgan Joseph vice chairman to set up a first Nashville office.
Making the move to Canaccord are:
• Roger Briggs Jr., who will lead Canaccord's sponsor coverage business nationwide and who was a partner at Trilantic Capital Partners from 2011 to 2013. Before that, Briggs (pictured) led Morgan Joseph's investment banking team for eight years.
• investment banker Dudley Baker, who had been with Avondale since late 2010, when he made the move from Morgan Joseph.
• health care technology and services analyst Richard Close and his right-hand man Brian Hoffman, who had been at Avondale since the springs of 2011 and 2012, respectively. Among the companies they cover is downtown-based HealthStream.
Getahn Ward with The Tennessean writes that the team is hunting for office space in Midtown or The Gulch.
Canaccord, whose shares are listed in Toronto (Ticker: CF) and in London, has a market cap of about $670 million and operations in 10 countries on four continents. The firm earlier this month recruited a team of real estate investment trust analysts in New York and San Francisco.
The move by Baker, Close and Hoffman is a blow for Avondale, whose CEO Pat Shepherd last fall told the Post he was seeking to grow his investment banking team and who early this year added former Stephens managing director Stephen Scott. Avondale's investment banking group, which is led by Jonathan Morphett, now has nine members.
Avondale Partners analyst Brian Hoffman says Healthcare Realty Trust investors should look for the company to sell a few more properties than previously expected this year. Healthcare Realty execs recently issued $250 million in notes to redeem most of another chunk of debt and plans to borrow about $83 million from its revolving credit line to finish that deal. That, Hoffman says, will lead to 2015 dispositions worth about $100 million rather than $75 million. The analyst has reiterated his 'market perform' rating and $28 price target on the stock (Ticker: HR), which closed Tuesday at $26.75.
Down the hall at Avondale, Richard Close has reiterated his 'market outperform' rating and $33.50 price target on shares of HealthStream following the company's strong first-quarter earnings report. Close says he and his associates have "an upward bias to our estimates throughout 2015, although we note management effectively affirmed guidance despite the beat. We look to gain additional details on timing of investment spend throughout the remaining quarters of 2015." HealthStream shares (Ticker: HSTM) popped 9 percent Tuesday to $29.20.
Shares of HealthStream were up 17 percent Tuesday afternoon, following a solid third-quarter earnings report Monday. At about 2 p.m., the stock (Ticker: HSTM) was changing hands at $28.64. (Year to date, it's still down 12 percent.) Avondale analyst Richard Close thinks it should climb higher still in the coming months. He has reiterated his 'outperform' rating and $33.50 price target for the Nashville company, which beat analysts' expectations on both the top and bottom lines.
Close said HealthStream continues to build momentum, and with an established customer base, the next phase of growth will be product development. With health reform increasing pressure on provider metrics, demand for workforce training products is expected to rise.
Richard Close at Avondale Partners has reaffirmed his buy rating and target price of $33.50 for HealthStream, saying that the workforce development company has multiple avenues for growth in addition to its ICD-10 training products. Revenue growth excluding ICD-10 has accelerated above 20 percent, Close said, and the company's other service lines should "foster growth and ease headwind of ICD-10 roll-off."
Looking ahead to HealthStream's second-quarter earnings report, Richard Close at Avondale Partners says he won't be surprised if the company's strong subscriber growth slowed. The culprit is likely to be the cloudy outlook during the quarter around the implementation of the new ICD-10 diagnosis and procedure code. But with an Oct. 1, 2015, deadline now in place, Close says investors should get some clarity from CEO Bobby Frist. He expects HealthStream to post pro forma earnings per share of 7 cents, a penny less than the Street's consensus. Shares of the company (Ticker: HSTM) rose slightly to $22.89 Monday but are down about 30 percent so far in 2014.
Shares of health care learning services company HealthStream got a 3 percent boost Thursday after the Centers for Medicare and Medicaid Services said the new deadline for providers to comply with the ICD-10 coding regulations will be Oct. 1, 2015. Uncertainty around the deadline had given skittish investors a reason to sell HealthStream, which got about 10 percent of its 2013 revenues from ICD-10 products. But Avondale Partners analyst Richard Close says the company "will begin to see additional sales for its ICD-10 offering sooner rather than later now that the deadline has been definitively established." He still expects the stock (Ticker: HSTM) to climb back to $33.50 from its current levels of about $23.
Richard Close says investors could make more than 40 percent if they step into HealthStream following the company's first-quarter profit report. On Thursday, he reiterated his 'market outperform' rating and $33.50 price target and lifted his operating income forecast for this year and next.
"We view the recent pullback over ICD-10 to be an opportunity to add to current positions or initiate a new position as we expect solid growth in operating income and revenue ex. ICD-10 to prove more important than temporary uncertainty from CMS," said Close, who also pointed out that HealthStream's market cap as a multiple of per-subscriber revenue is at its lowest since 2011.
Close's backing didn't do HealthStream shares (Ticker: HSTM) much good Thursday, though. After regaining only a little bit of the 6 percent they lost Tuesday on the heels of the earnings report, they fell another 5 percent to $22.20. That's their lowest level since last May.
Shares of HealthStream are off 25 percent so far this year partly because investors have been digesting the lowered operating income guidance that came with word of the March acquisition of a compliance curriculum provider. But local Avondale Partners analyst Richard Close told clients Wednesday that the company's upcoming Q1 earnings report offers a way for the stock to recover some of those losses. What CEO Bobby Frist and his team will have to show, Close said, is continued subscription revenue growth of at least 30 percent and the addition of a minimum of 50,000 subscribers. (Last quarter, those numbers were 36 percent and 289,000.)
"Assuming organic growth exceeds 20 percent, we believe that the risk/reward scenario will lead to positive returns for investors," Close said.
HealthStream (Ticker: HSTM) was up slightly to $24.23 in the first hour of trading Wednesday. Close has a price target of $33.50.
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