The Zacks Analyst Blog Highlights:Cisco Systems, Athenahealth, Bank of
America, Cerner and Merge Healthcare
CHICAGO, May 15, 2013
CHICAGO, May 15, 2013 /PRNewswire/ --Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Cisco Systems, Inc.
(Nasdaq:CSCO), Athenahealth, Inc. (Nasdaq:ATHN), Bank of America Corporation
(NYSE:BAC), Cerner Corporation (Nasdaq:CERN) and Merge Healthcare Incorporated
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Here are highlights from Tuesday's Analyst Blog:
What's In Store for Cisco's Earnings?
Cisco Systems, Inc. (Nasdaq:CSCO) is set to report third quarter 2013 results
on May 15. Last quarter it posted a 9% positive surprise. Let's see how things
are shaping up for this announcement.
Growth Factors This Past Quarter
Though Cisco was affected by the sluggish macro environment, the company's
sales growth rates in the second quarter were above the year-ago comparable
period and better than management guidance, attributable to the ramp of
several important products and strength in the Data Center, Switching and
Wireless lines of business. Order growth was quite encouraging and the trend
is reflective of Cisco's superior strategy and innovation.
However, margin expansion was limited due to an unfavorable mix and increased
expenditure on new products.
The company's restructuring activities to expand its operations in certain
strategic areas including cloud computing and the pursuance of growth
opportunities in international markets could be potential catalysts going
forward. However, we believe that the intense competition in the company's
core businesses of routers and switches remains a matter of concern.
Our proven model does not conclusively show that Cisco will beat earnings
estimates this quarter. That is because a stock needs to have both a positive
Earnings ESP (Read: Zacks Earnings ESP: A Better Method)and a Zacks Rank #1,
#2 or #3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate
stand at 45 cents. Hence, the difference is 0.00%.
Zacks Rank #4 (Sell): We caution against stocks with Zacks Ranks #4 and #5
(Sell rated stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Athenahealth Purchases Landmark Property
Leading vendor of cloud-based services for physician practices and inpatient
settings, Athenahealth, Inc. (Nasdaq:ATHN) recently reported that it has
concluded the purchase of the Watertown 'Arsenal on the Charles' from Harvard
University. The Arsenal on the Charles is a large multiple building business
property spread across 29 acres. It is situated just 10 miles from Boston.
The Arsenal on the Charles is recognized as a historical site. It has 11
buildings first built over 200 years ago. The complex has served as the
company headquarters since 2005.
The deal is valued at $168.5 million. The property will ensure that the
company has the ability to grow in the health care business.
ATHN used a fresh $325 million senior bank facility of five years duration to
fund its purchase of the Arsenal on the Charles. It comprised of $125 million
of unsecured revolving credit and $200 million term loan availability. The
latest credit arrangement will take the place of Athenahealth's present
revolving credit arrangement. One of the joint main arrangers was Bank of
America Corporation (NYSE:BAC).
Athenahealth's web-based deployment provides a low-cost scalable service while
its flexible rules engine leads to higher efficiency in claims settlement. The
Software-as-a-Service (SaaS)-based approach allows for a more flexible
delivery mechanism that helps Athenahealth win deals. The company has
traditionally enjoyed high customer satisfaction rates, which facilitates a
larger number of referrals.
Athenahealth's unique business model makes it a strong provider of RCM
services (athenaCollector) designed for small physician practices. Its EHR
product (athenaClinicals) is a key player in ambulatory settings. We believe
that sales of athenaClinicals are likely to remain robust. In addition, the
company will harness its newer products, namely athenaCommunicator and
Athenahealth should benefit from its extensive athenaCollector client base, as
only a minority of its subscriber base also utilizes athenaClinicals. Cross
selling represents a real growth opportunity in the near term. In this regard,
Athenahealth has made rapid strides in capturing the EHR business of physician
practices. However, this segment is shrinking, as hospitals increasingly
absorb physician's medical practices.
Athenahealth is geared to establish itself in the enterprise segment. The
company has recently signed on, and executed several enterprise-sized deals,
which provide it with a credible and referenceable client base. In Mar 2013,
Athenahealth completed the takeover of Epocrates, a provider of point-of-care
digital solutions in the healthcare industry. The acquisition will enable
Athenahealth to increase its user network and improve its brand awareness.
Though fresh opportunities are shrinking, the replacement market has been
growing. Competition is fierce and larger competitors may benefit from the
incumbency factor. Industry stalwarts such as Cerner Corporation (Nasdaq:CERN)
offer long-standing seamless products which integrate inpatient and
We currently have a Zacks Rank #3 (Hold) on the company. However, we are more
positive about other stocks such as Merge Healthcare Incorporated
(Nasdaq:MRGE) which carries a Zacks Rank #2 (Buy) and is expected to do well.
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