Avondale Partners analyst Richard Close has lifted his price target for shares of HealthStream to $33.50 from $31 after the education and compliance products provider reported its Q2 profits. While noting that the company's conference call didn't provide "significantly revelatory information," Close likes the look of HealthStream's growth pipeline and has raised his enterprise value/sales valuation multiple to 5.5x from 5x. In early Thursday trading, HealthStream shares (Ticker: HSTM) were down about 1 percent to around $32.10.
Down the hall at Avondale, Kevin Campbell says HCA's preview of second-quarter results surprised him by showing same-facility revenue growth of 2.9 percent when he had expected a slight drop. Campbell's models aren't assuming that trend continues, but he has hiked his EPS estimates for 2013 to $3.19 from $3.05. He rates HCA shares (Ticker: HCA) at 'market outperform' and expects it to climb to $47 from its current level of $38 and change.
Investors are drooling over HealthStream's second-quarter earnings and the company's positive outlook outlined on a conference call this morning. Shares of the downtown-based provider of health education and compliance products climbed steadily throughout the morning to all-time highs. At about 11:15 a.m., they were changing hands at $33.35, up more than 15 percent on the day. More than 345,000 shares had already changed versus the stock's daily average of about 103,000.
Some details from the call that appear to have gotten investors drooling:
• CEO Bobby Frist talked more about how his team's new partnerships with Brookdale Senior Living and Almost Family are setting the stage to break into the post-acute care sector. He repeatedly emphasized the long-term nature of those deals as well as their collaborative nature, saying that the companies plan to co-develop educational and compliance content as they get a better feel for the needs of employees at Brookdale, Almost Family and their peers.
• HealthStream has accrued $250,000 in bonus payments related to the performance of the Sy.Med credentialing business acquired last year. Frist said the business has set a number of records so far this year and that he has plans to expand the division's offerings beyond its traditional physician office channel into the hospital space.
• The company's SimVentures simulation products partnership with Laerdal is gaining traction, with revenues doubling during the quarter to $802,000. Frist said the high-tech simulation training tools are showing great promise with the three health systems that have signed on so far.
Ingram Content Group's Vital Source e-textbook division has struck a deal with Dutch publisher association Nederlands Uitgeversverbond and distributor CB to roll out a digital platform for the country's higher education system. Vital Source's offerings will be made available later this month.
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.
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