Quality Systems Inc., a Wall Street darling, recently was downgraded by an analyst who said there is “plenty to like, but it is time for a breather.”
Analyst K. Newton Juhng of BB & T; Capital Markets recently downgraded Quality, an Irvine healthcare information technology company, to hold from buy. Juhng said the growth of Quality had already hit his expectations of $50 per share.
Quality “continues to achieve new heights, but are the Street’s expectations outstripping what (Quality) can achieve operationally?” Juhng said.
So far this year, Quality’s shares are up about 15%.
Quality makes software that doctors and dentists use to manage their practices. Analysts have said that President Obama’s stimulus package, which includes up to $20 billion to stimulate healthcare information technology, could be a boon to Quality.
Juhng said that President Obama’s stimulus money already was priced into Quality’s stock and that investors shouldn’t get overly excited about its near-term contribution.
Juhng said he expects Quality to continue its solid performance, “but we believe investors have recognized the positioning of the company for potential stimulus dollars and driven up the valuation as a result. We would caution investors not to get overly enthusiastic as government dollars often take longer to come to fruition than originally conceived.”
Juhng said the company doesn’t have additional growth products, which could make it harder for Quality to exceed a higher stock price.
“The fact remains that management is not providing any guidance for fiscal 2010, and we believe the expectations for (Quality) are building as the stock price rises,” he said. “At a price north of $50 per share, those expectations, particularly in the near-term, may be difficult for the company to meet.”
Masimo Monitor: Money Saver
Irvine device maker Masimo Corp. recently released an economic analysis of its SpHb hemoglobin monitor,which continuously and noninvasively measures hemoglobin,that touts the product as a big money saver for local hospitals.
The analysis found that a 500-bed hospital could save $500,000 a year by incorporating Masimo’s hemoglobin monitor.
The savings would be found by “helping clinicians prevent unnecessary blood transfusions, identify internal bleeding earlier, and increase patient throughput,” Masimo said in a release.
The analysis was conducted through 70 one-on-one interviews with doctors at 15 acute-care hospitals and through follow-up surveys with 200 hospital doctors. Masimo commissioned Capgemini, a French consulting firm, to do the analysis.
“We believe the analysis used reasonable assumptions, which points to a one-year payback for a 10-bed ICU and 1.5-year payback for a 20-(operating room bed) investment,” said Sean Lavin, an analyst at Lazard Capital Markets LLC who has a buy rating on Masimo’s stock.
The study also should help Masimo’s device get into more hospitals, Lavin said.
Nobel Biocare Adding Space
Nobel Biocare USA LLC, a maker of dental implants that’s part of Switzerland’s Nobel Biocare Holding AG, has started work on a manufacturing and office renovation project on its Yorba Linda facility.
The value of the project wasn’t disclosed. KPRS Construction Services Inc. of Brea is the general contractor.
Ware Malcomb, an Irvine-based architectural firm, is doing interior architecture and graphic design.
The first phase of the remodeling was completed in March and the second phase is expected to be finished in June.
Nobel’s building, located on Savi Ranch Parkway, is made up of 38,000 square feet of manufacturing space and 12,000 square feet of office space. Features include an interactive tour route for visiting dentists with descriptive vignettes.
