Two longtime Healthways analysts on Friday cut their price targets for the population health management play after new and interim CEO Alfred Lumsdaine said 2015 profits will not meet expectations. But both Brooks O'Neil at Dougherty and Sean Wieland at Piper Jaffray are not telling investors to stop buying the company's shares, keeping Healthways at 'buy' and 'overweight' ratings, respectively. O'Neil's target for Healthways, which on Friday fell 20 percent to $12.40 (Ticker: HWAY), has come all the way down to $15 from $25. Wieland is staying more upbeat: His target now stands at $25.50, down from $27.
The skies are decidedly brighter for shareholders of Acadia Healthcare, which has climbed about 25 percent so far in 2015 after rising by about a third last year. Mizuho Securities analysts see even better days ahead and have launched coverage of the Franklin-based company with an 'outperform' rating at a price target of $84. Acadia (Ticker: ACHC) closed Friday trading at $76.47.
Analyst Steve Manaker at Oppenheimer has launched coverage of newly public Community Healthcare Trust with an 'outperform' rating and a price target of $21. A key in his analysis is the type of properties CEO Tim Wallace and his team are targeting: "The key for us is not just management's ability to underwrite the real estate but also the importance of a tenant's place in the local healthcare ecosystem." Community Healthcare Trust (Ticker: CHCT) is changing hands this morning at about $19.10.
Manaker's colleague Mohan Naidu has begun covering shares of population health management company Healthways (Ticker: HWAY) with a neutral rating. Among his concerns are how the exit of former CEO Ben Leedle might hurt contract renewals and the long-term impact of health insurance exchanges on Healthways' work with large employers.
What does it say about a company when its CEO exits suddenly and its stock barely budges on so-so volume?
It tells us not many people are interested.
Shares of Franklin-based Healthways (Ticker: HWAY) were down 1.5 percent just before the close on Monday after the company said it had terminated Ben Leedle's contract Friday. Around 200,000 shares had changed hands versus the stock's daily average of 515,000. At about 12:30 p.m., they had been down slightly, but they gave up about 1 percent in the last hour of trading.
The somnolent response took us back to late 2011, when we were working on "Not buying it," a magazine cover story discussing in depth Leedle's struggle to regain the confidence of customers and investors. Here's an excerpt from that story, which led our January 2012 issue:
But critics and skeptics say it’s still not clear the company can properly and consistently monetize its plum position in one of the most talked-about segments of the health care market. And that translates to Wall Street: Simply put, investors won’t buy what they can’t trust.
O’Neil, who has over the years maintained a bullish outlook on the company, told Nashville Post that the stock performance in recent years “reflects that they have made some bets that have not panned out.”“Much of the price drop is due to investors simply abandoning the stock,” he said, a point borne out in a look at the company’s top investors, which have almost completely turned over in the past three years.
From our vantage point, one of the Healthways board's main priorities in naming a replacement for Leedle is stirring up some excitement. There still appears to be potential in the company's model, evidenced by six new customers signing up in the first quarter. But the next person selling that potential to the Street will need to quickly make a positive connection.
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