Cramer’s Overlooked Medical Billing Solutions IPO (ATHN, MDRX, QSII)

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athenahealth (NASDAQ:ATHN) is a Web 2.0 version of medical billing, and it is like Allscripts Healthcare Solutions (NASDAQ:MDRX) and Quality Systems Inc. (NASDAQ:QSII).  He likes that the company has very high loyalty and renewal rates and this is a subscription services and this currently has $2 Billion in physician revenue under management that it gets a cut of.  He thinks it can earn $0.74 next year and even with the premium forward earnings multiples that it is actually cheap on a comparable basis to its growth.

Is this really an overlooked IPO?  No.  It came public at $18.00 and closed at $34.07.  He thinks this could go to $40.00 on its own, but also thinks a larger company could acquire it.  He also believes this will get positive analyst coverage soon.  This one ran so much that you cannot think this was overlooked at all.  This may not be that well known to the public, but traders have been playing this one over the last ten trading sessions since its IPO.  Shares rose 8% to $36.80 in after-hours on Cramer’s feature.

Jon C. Ogg
October 3, 2007