Epocrates gains on upgrade citing strategy shift
NEW YORK (AP) — Shares of health care technology company Epocrates Inc. rose to an annual high Monday after a Raymond James analyst upgraded the stock, praising the company for a change in strategy.
THE SPARK: Analyst Alexander Draper raised his rating to "Strong Buy" from "Market Perform" and established a price target of $15 per share. Epocrates develops software for medical providers, and Draper praised the company for focusing on its core business and trying to form new partnerships instead of expanding its services. He said that will lead to strong results in 2013, forecasting $120 million in revenue for the company.
Analysts expect Epocrates to report $116.5 million in revenue in 2013, according to FactSet.
THE BIG PICTURE: Rose Crane stepped down as president and CEO in November, and the San Mateo, Calif., company chose Andrew Hurd as its new president and CEO March 26.
Draper said that under Crane, Epocrates was "overly focused" on marketing its products to pharmaceutical companies, even though those companies were cutting their marketing budgets. He said a new strategy might also reduce the company's development and sales costs.
"By now focusing on monetizing the company's physician base through partnerships, Epocrates' current management will be able to generate a new revenue stream that does not require the costs of creating a new service line," he wrote.
SHARE ACTION: Epocrates shares picked up 55 cents, or 5.2 percent, to $11.11 in afternoon trading. Earlier the stock reached an annual high of $11.60.
Epocrates shares went public in February 2011, and the company's initial public offering priced at $16 per share. The stock reached a high of $30.24 a few days later, but the stock hasn't traded at $15 since August 2011.