Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of health care IT services specialist Catamaran (NASDAQ: CTRX ) sank 10% today after the company's quarterly results and outlook disappointed Wall Street.
So what: Catamaran's first-quarter adjusted EPS soared 62%, but a miss on the top line -- revenue of $3.2 billion versus the average analyst estimate of $3.53 billion -- is forcing analysts to recalibrate their valuation estimates. While the company continues to grow both earnings and revenue at a breakneck pace, today's results suggest that it isn't growing fast enough to justify its seemingly lofty P/E.
Now what: Management still sees full-year adjusted EPS of $1.81-$1.88 on revenue of $14.2 billion-$14.6 billion, versus Wall Street's view of $1.87 and $14.52 billion. "Catamaran is off to a great start in 2013, and we expect to continue to deliver strong results for the remainder of the year and continued growth going forward," Chairman and CEO Mark Thierer reassured investors. More important, with the stock now off about 10% from its 52-week highs and trading at a forward P/E of about 20, Mr. Market might finally be offering a decent opportunity to buy into those growth prospects.
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