athenahealth Crumbles on Einhorn's Short Call - Analyst Blog
) tanked after founder and president of hedge fund behemoth
) David Einhorn revealed that the company is highly overvalued and,
as a result, he has decided to short the stock as its price will
Einhorn has, in fact, predicted that shares of athenahealth may fall substantially by as much as 80% from its all-time high reached earlier this year. He has also questioned the issue of innovation of the company and raised doubts about its ability to compete with privately held Epic Systems, which offers similar lines of services.
Shares of athenahealth sunk nearly 15% till date after Einhorn's description of the stock as "bubble stock" at the Ira Sohn Investment Conference in New York last Monday.
athenahealth does appear overvalued compared to its peers. Its forward price-to-earnings (P/E) ratio of 443.2 is higher than the P/E of 42.94 of its peer group. However, its long-term EPS growth of 23.8% is higher than the peer level of 17.6%.
athenahealth posted adjusted loss of $3.0 million or 8 cents per share in the first quarter of 2014 in stark contrast to earnings of $6.0 million or 16 cents per share in the same quarter of 2013. The loss per share was broader than the Zacks Consensus Estimate of a loss of a penny for the quarter.
Revenues in the quarter rose 29.8% to $163.0 million but lagged the Zacks Consensus Estimate of $170 million. Excluding the Epocrates and other revenues (consisting of third-party tenant revenues) totaling $14.8 million, core athenahealth revenues rose 23% to $148.2 million in the quarter.
Currently, athenahealth carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical products industry at this moment include Enzymotec Ltd. ( ENZY ) and INSYS Therapeutics, Inc. ( INSY ). Both of them carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ATHENAHEALTH IN (ATHN): Free Stock Analysis Report
ENZYMOTEC LTD (ENZY): Free Stock Analysis Report
GREENLIGHT CAP (GLRE): Free Stock Analysis Report
INSYS THERAP (INSY): Free Stock Analysis Report
To read this article on Zacks.com click here.