At about 1 p.m. Central Tuesday, shares of HealthStream were among the market's biggest movers, climbing almost 20 percent to about $26.50 on the back of its solid second-quarter earnings. Volume was heavy, with the number of shares changing hands on track to triple the stock's daily average.
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.
Stifel Nicolaus analyst Steve Rubis initiated coverage on HealthStream Tuesday, giving the company a 'hold' rating. Rubis has not set a price target for HealthStream, which he said has a competitive advantage thanks to its portfolio of workforce development solutions, but could come up short technologically.
"Although we believe HealthStream operates a strong SaaS-based distribution platform, we believe the company lacks a proprietary technological competitive advantage," Rubis said.
Shares of HealthStream (Ticker: HSTM) were down 2 percent Tuesday to $25.97.