Analyst Peter Heckmann says HealthStream will struggle in 2016 to post the growth investors have become used to of late because of the expected dropoff in revenues from training products related to the new ICD-10 medical classification system. That book of business accounted for 17 percent of HealthStream's top line last year but Heckmann says that share will fall off to less than 4 percent by the end of 2016.
HealthStream's leaders are working to offset that drag — their Precyse DNA coding proficiency platform should bring in $2 million in sales this year — but Heckmann has nonetheless lowered his price target for the company's shares to $30 from $34 while keeping his 'market outperform' rating. HealthStream (Ticker: HSTM) closed Friday's trading session at $24.21.
SEE ALSO: CEO Bobby Frist earlier this summer discussed his team's plans to migrate to other products customers who came to HealthStream for ICD-10 services
Needham Securities analyst Scott Berg is suggesting investors take a breath on HealthStream after the company's second-quarter earnings report and conference call. He has downgraded the stock (Ticker: HSTM) to 'hold' from 'buy' and wants to see a clearer growth narrative for parts of the business.
While the company's 2Q call detailed a core business that remains strong, potential early ICD-10 customer loss, the continued lack of visibility of declining ICD-10 related revenues, and an underperforming Patient Experience segment give us less confidence that the company can drive meaningful upside to our current growth estimates.
Bass Berry & Sims has hired a former HealthStream marketer to be its new director of marketing and communications. Tracy Roberts comes to downtown-based Bass after spending almost eight years at HealthStream. In her new role, she will be primarily responsible for reputation management, public relations and positioning strategies. Read more about Roberts here.
Analyst Scott Berg has moved to Needham & Co. from Northland Capital, where he has begun covering shares of HealthStream, among others. Berg is upbeat about the outlook for the downtown-based company, saying it has before it two big health care industry trends in the growing adoption of talent management software and greater regulation filtering into workforce training. He has rated HealthStream, which closed Tuesday's session (Ticker: HSTM) at $27.86, a 'buy' and sees it climbing to $33 in the coming year.
"We believe the greatest near-term risk to be purely execution-related, and we therefore see a positive risk/reward scenario for investors," Berg said.
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.
POSTDATA: WARRANTY DEEDS