Growth opportunities for hospital software provider MedAssets Inc. have not diminished despite a slowdown in its contracted revenue, Raymond James analyst Alexander Y. Draper said in a Monday research note.
THE BACKGROUND: On Aug. 4, the Alpharetta, Ga., company said it earned $3.3 million, or 6 cents per share, on $95.1 million in revenue in the second quarter.
Revenue was up 13 percent year-over-year. The company said it saw strong demand for medical device consulting and increased technology services.
But the company’s 12-month contracted revenue slowed down for the third consecutive quarter, sparking concern about whether its new business pipeline will support growth expectations, Draper said. Shares have fallen 19 percent since the earnings report.
THE OPINION: “Despite the reported deceleration of contracted revenue, we do not believe that company growth opportunities have deteriorated,” Draper wrote. The analyst said a “short-sighted” market reaction to that moderated growth has created an attractive buying opportunity for investors.
He upgraded the shares to “Outperform” from “Market Perform.”
THE STOCK: MedAssets shares fell 41 cents, or 2 percent, to $19.89.