Greenway shares fall on underwhelming guidance
CARROLLTON, Ga. (AP) — Shares of medical software maker Greenway Medical Technologies dropped Thursday after the company posted weak quarterly results and offered an underwhelming forecast.
THE SPARK: The company reported fourth-quarter earnings late Wednesday of 7 cents per share, compared with the average analyst estimate of 9 cents per share, according to FactSet.
For fiscal-year 2013 the company projected adjustearnings per share of 27 to 31 cents per share. That was lower than analyst estimates of 34 cents per share.
THE BIG PICTURE: Greenway began trading publicly in early February after a successful initial public offering. The software maker is one of a handful of technology companies who have seen their shares rise following an IPO in recent months, trading between 40 to 70 percent higher than its initial price of $10. However, analysts have questioned whether the company can maintain its momentum.
THE ANALYSIS: Sterne Agee analyst Greg Bolan said the company's "growth trajectory will be shallower than discounted in current valuation."
"We do not believe that FY13 guidance will be a sufficient catalyst for the stock to break through the trading range of the past several months," Bolan said in an investment note.
Cowen analyst Charles Rhyee saw the quarterly results as mostly positive, but noted the company's backlog was flat with the last quarter. Backlog has been flat or declining for the past few quarters, he said. "This reflects increased efficiency in GWAY's implementation efforts, but, given issues at some peers, the market may take a pause."
Greenway makes electronic health records software and programs used to manage medical practices and hospitals.
SHARE ACTION: Shares of Greenway Medical Technologies Inc. fell $1.36, or 8.2 percent, to end Thursday trading at $15.16.