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Can athenahealth (ATHN) Pull a Surprise in Q1 Earnings?

Zacks Equity Research
Updated

athenahealth Inc. ATHN is set to report first-quarter 2016 results on Apr 28. Last quarter, the company posted earnings of 45 cents per share, which comfortably beat the Zacks Consensus Estimate by 29 cents.

We note that athenahealth has surpassed the Zacks Consensus Estimate in the last four quarters, by an average of 240.42%.

 

Let’s see how things are shaping up for this quarter.

Factors at Play

We believe athenahealth’s strong product portfolio, expanding physician base and unique business model will continue to drive its top line. Meanwhile, the company’s business wins from the likes of Trinity Health, NewYork-Presbyterian and Adventist Health will continue to drive market penetration. Further, the recognition of the company as an Electronic Health Record (EHR) usability leader is a significant positive.  

Earnings Whispers

Our proven model does not conclusively show that athenahealth is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or at least 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: athenahealth currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a breakeven.

Zacks Rank: athenahealth has a Zacks Rank #1 (Strong Buy) which increases the predictive power of ESP; but when combined with a 0.00% ESP, it makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are a few stocks worth considering that, as per our model, have the right combination of elements to post an earnings beat this quarter:

Gilead Sciences GILD, earnings ESP of +1.65% and a Zacks Rank #1.

MediWound MDWD, earnings ESP of +8.33% and a Zacks Rank #1.

PAREXEL International PRXL with earnings ESP of +2.25% and a Zacks Rank #1.

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ATHENAHEALTH IN (ATHN): Free Stock Analysis Report
 
GILEAD SCIENCES (GILD): Free Stock Analysis Report
 
PAREXEL INTL CP (PRXL): Free Stock Analysis Report
 
MEDIWOUND LTD (MDWD): Free Stock Analysis Report
 
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Zacks Investment Research