This past Thursday our Healthcare Sector Head Tom Tobin held a conference call updating his team’s bullish thesis on athenahealth (ATHN) ahead of the print with institutional subscribers. ATHN continues to be one of his team’s Best Long Ideas.
The stock has risen over 15% since Tobin’s call.
According to Tobin, there was little for bears to hang onto coming out of the quarter in this battleground stock – lower revenue per physician due to higher enterprise client mix.
Among the many positives include record bookings, a second straight quarter with the financial component of the balanced scorecard above 100% at 115% (proxy for bookings), and Collector physician adds that beat estimates (2k vs. 1.6k), which is the product that matters.
In addition, while profitability is currently masked by high levels of investment to drive growth, ultimately, we think they will be a mid-70% gross margin (63% currently), high-20% operating margin business (10% currently).
At around +30% short interest, we think this recent move higher is just the beginning. We still think this is a $200+ stock, and have greater confidence in ATHN tracking to our long-term adoption forecast model toward 15% share of the ambulatory physician market.
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(Send an email to sales@hedgeye.com if you would like access to our latest ATHN Black Book)
