Richard Close at Avondale Partners has upgraded shares of HealthStream to 'market outperform' from 'market perform,' saying the health care education and talent management company can continue to grow on a number of fronts, including by cross-selling its products. "We have an upward bias to our forecasts going forward as the company continues to execute on multiple growth levers as illustrated in April with 1Q results," said Close, whose new price target of $31 (from $25) is above HealthStream record high set last fall. Close's call lifted HealthStream almost 5 percent to $25.69 Monday. The stock (Ticker: HSTM) is now up slightly on the year.
Just down the hall, Mark Montagna also is upbeat about the prospects for shares of shoe and hat retailer Genesco. Positive signals from rival Shoe Carnival, especially in canvas and fabric shoes, are "likely a solid read" to Genesco's performance, Montagna says. Although he sees fiscal Q1 being a bit of a bummer, Montagna expects consumers to now be making up for lost February and March sales. He has raised his price/earnings ratio target to 13 from 12, which in turn has lifted his price target for Genesco shares (Ticker: GCO) to $70 from $66. Genesco rose 1.7 percent Monday to close at $69 and change. The stock is up 26 percent year to date.
Whit Mayo at Robert W. Baird has upgraded Community Health Systems shares from 'neutral' to 'outperform' and hiked his price target for the Franklin-based company to $56 from $48. The move comes after CHS (Ticker: CYH) has given up about 10 percent this month.
At Avondale Partners, Richard Close isn't quite ready to make the same move on HealthStream shares. Following up on the company's Q1 earnings report — which were highlighted by better-than-expected revenues — Close told clients Tuesday he is sticking with his 'market perform' rating and $25 target, which is only just above where the stock (Ticker HSTM) now trades. He likes the company's growth story and its prospects in the coming quarters, but the timing just isn't quite right. "Considering we believe that HSTM can continue this level of growth in the near term, we would use a pullback to re-evaluate our rating on the stock," he wrote.
Coming off a year when HealthStream grew its top line by more than a quarter and operating income rose 19 percent, the company's board of directors has awarded 5 percent raises to its top executives. As detailed in HealthStream's proxy statement filed this week, President and CEO Bobby Frist will be paid a 2013 base salary of almost $270,000 while his top lieutenants all will get between $202,000 and $256,000.
Shares of HealthStream (Ticker: HSTM) closed Thursday at $22.27 and have fallen about 8 percent year to date.
As part of his team's fourth-quarter earnings report this week, HealthStream CEO Bobby Frist also announced the company's move into the long-term care and home health provider markets as well as other post-acute segments. On the company's conference call with analysts Wednesday, Frist offered up some more details. Here are some of them; for the full transcript of the call, click here.
• HealthStream already has some clients in this space and is reorganizing its internal reporting to better group them. It's also hiring a number of salespeople — its total sales force grew to 76 from 61 last year and should add another 10 people in the coming months — to focus on post-acute prospects. However, Frist said meaningful new revenue streams from the push won't show up until late this year.
• Look for news of content and technology partnerships this spring as HealthStream builds out its offerings to the post-acute market, which executives say has a workforce of about 3 million. Costs won't ramp up quickly, Frist said, but will likely peak late in the third quarter as hiring picks up.
• Pricing and margins could become interesting. Frist said HealthStream's research shows a number of playes in the post-acute talent management space have price points that are higher than in the acute-care arena. So HealthStream has a chance to sell its products for more than it's charging for its main business now but still be a relative bargain in the post-acute market.
• As has been the case with HealthStream's existing businesses, acquisitions or joint ventures are on the table when it comes to building out oferings.
"It might be supplemental over time. We’ll take our time and process those opportunities, but I would not exclude opportunities in that space just because we’ve launched an organic strategy," Frist said. "We might find really good compliments on how to help that vertical grow as well."
Shares of HealthStream (Ticker: HSTM) are up about 1 percent to about $21.40 in early Thursday action. They're off about 12 percent so far this year.
In the year since John Wark opened the doors to the nonprofit Nashville Software School, the developer academy has found its place in the city's creative community — and turned away some folks Wark says looked like they would leave town as quickly as they got here. Pierce Greenberg has the story in this week's City Paper, where he writes about Wark's plans to add night classes and hook up with local government and education officials.
“I’ve shown we can create employable, entry-level developers. So I think we’re at the point where we can have a serious conversation with both the city, who again is committed to development of the tech workforce, and the state,” Wark said.