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.
For every buyer, a seller. And for every bull, a bear.
Earlier this week, Noble Financial analyst Vince Colicchio recommended investors jump back into HealthStream after shares of the health care education services company retreated some 30 percent since the fall. That move was quickly followed by the opposite recommendation Northland Capital's Scott Berg. His main reason was the pushing back of the deadline for health care providers to switch to ICD-10, a new coding system. The move will bring with it some financial fog about this year and next, said Berg, who cut his rating to 'market perform' from 'outperform' and his price target to $30 from $43.
Although we believe this delay could ultimately result in higher cumulative ICD-10 revenues, we are reducing estimates and downgrading from OP to MP, even though current share price might reflect the uncertainty, until we have better clarity.
Shares of HealthStream (Ticker: HSTM) are down about 2 percent since Berg's call Wednesday morning. They closed Thursday at $26.50 and are down about 19 percent so far in 2014.
The retreat by HealthStream shares — about 15 percent year to date and 30 percent from their October highs — has caught the eye of one veteran analyst following the health education services provider. Vince Colicchio of Noble Financial on Tuesday morning upgraded HealthStream to 'buy' from 'hold.' He sees the stock shares (Ticker: HSTM) climbing to $34, more than 25 percent higher than where they closed Monday. They were up almost 2 percent in early action Tuesday.
Count Darren Lehrich among the fans of Brookdale Senior Living's planned $2.8 billion acquisition of rival Emeritus. The veteran Deutsche Bank analyst on Friday morning hiked his price target for Brookdale (Ticker: BKD) to $38 from $35 and says, "The deal puts an exclamation point on the value of BKD's infrastructure and leadership position in the senior living space, and it should accelerate the value of ESC's portfolio over the mid/long-term." As for the cost savings and revenue opportunities expected by Brookdale CEO Andy Smith and his team, Lehrich says there's a good chance they'll prove conservative.
As his peer Frank Sparacino of First Analysis did Thursday, locally based Richard Close of Avondale Partners is backing HealthStream CEO Bobby Frist's strategy of investing in future growth rather than focusing on pumping up profits now. Reiterating his 'market outperform' rating and $33.50 target, Close says HealthStream's focus on building more products for its customers "should be welcomed." And noting the expected 26 percent jump this year in research and development spending, Close says, "The elevated growth is acceptable, assuming it sustains 20%-plus organic growth in recurring revenue." HealthStream shares aren't responding, however: As of 11 a.m., they were down about 2 percent (Ticker: HSTM) to about $28.
HealthStream CEO Bobby Frist fielded plenty of questions Wednesday from analysts who wanted to know more about his team's plans to invest in growth. Investors didn't appear to like all of Frist's answers, which included a refusal to get drawn into projecting the company's 2015 profit goals: Shares of HealthStream (Ticker: HSTM) gave up more than 8 percent. That, says Frank Sparacino, is an opportunity to jump in. The First Analysis researcher has upgraded HealthStream to 'overweight' from equalweight' and says the company's valuation and revenue growth prospects are appealing. His target for the stock is $36, 25 percent above where the shares closed Wednesday.
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