Athenahealth Now A Strong Buy: Should You Add The Stock?

On Apr 5, athenahealth (NASDAQ:ATHN) was raised to a Zacks Rank #1 (Strong Buy). Headquartered in Watertown, MA, athenahealth provides exclusive services that manage administrative duties of medical providers through its cloud-based network.

The estimate revision trend for the company is pretty favorable with one estimate going up and no movement in the opposite direction over the last 60 days for both current and next year. The Zacks Consensus Estimate for full-year 2017 earnings remained stable at 44 cents per share over the last two months.

Over the last one month, the stock outperformed the broader markets with respect to price. Notably, athenahealth gained 1.5%, comparing favorably with the S&P 500’s loss of 0.2%. However, the current level lags the Zacks classified Medical Information Systems sub-industry’s gain of roughly 5%.

Key Catalysts

First, athenahealth’s huge client base and solid network expansion in the athenaCollector, athenaClinicals and athenaCommunicator platforms are major positives.

In the last reported quarter, the company registered 1,366 new active physicians in athenaCollector, compared with 2,148 in the year-ago quarter.

Second, acquisitions have helped athenahealth fortify its position in the inpatient market and compete with big names in the electronic health record software and the niche space.

The strategic partnership with Tandigm Health and the buyout of Austin-based Filament Labs are notable developments that are likely to drive revenues. Further, the recent partnership with OurHealth is expected to expand the company’s operations across the U.S. mid-west and southern regions.

Third, athenahealth’s portfolio comprises a wide array of products that include electronic health records, revenue cycle management, medical billing, patient engagement, care coordination, population health management and Epocrates.

Banking on the extensive product suite, athenahealth has been leading the Healthcare Information Technology market. Notably, as per a report by Markets & Markets, the HCIT market is poised to reach a worth of $228.7 billion by 2020, growing at a CAGR of 13.4%.

Stocks to Consider

Other top-ranked stocks in the broader medical sector include Inogen Inc. (NASDAQ:INGN) , Hologic, Inc. (NASDAQ:HOLX) and Fluidigm Corporation (NASDAQ:FLDM) . Notably, Inogen and Hologic sport a Zacks Rank #1 (Strong Buy) while Fluidigm carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Inogen has a long-term expected earnings growth rate of 17.50%. The stock represents an impressive one-year return of 86.2%.

Hologic has a long-term expected earnings growth rate of 11.33%. The stock represents a stellar one-year return of 20.02%.

Fluidigm has a long-term expected earnings growth rate of 25%. The stock posted a positive earnings surprise of 1.6% in the last reported quarter.

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