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 information technology provider MedAssets (UNKNOWN:MDAS.DL) fell as much as 11% following its fourth-quarter earnings report, but have since reversed course to a gain of 4% as of this writing.
So what: For the quarter, MedAssets reported a 4.5% rise in sales to $163.8 million and earnings per share of $0.27, which was nearly 16% below the year-ago period. Although revenue was higher than expected, investors honed in on MedAssets' $0.01 EPS miss relative to the Street's expectations and drove the stock down early. Looking ahead, MedAssets anticipates 2013 revenue of $670 million to $684 million with EPS of $1.22-$1.32, which compares favorably with the $676.3 million and $1.29 in EPS consensus.
Now what: It appears that the biggest reason MedAssets reversed course has more to do with it renewing its contract with the Resource Group, which it counts as a major customer, than its actual guidance. However, from the midpoint of its 2013 guidance, MedAssets seems very fairly valued at 15 times this year's earnings. As health organizations become more complex, I wouldn't be surprised if they continued to turn to the type of software provided by MedAssets, but I would also be careful not to chase a company like this too high.
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