Industrial Alliance lowers target, rating on Nightingale Informatix

Industrial Alliance Securities analyst Steve Li says Nightingale Informatixs’ (Nightingale Informatixs Stock Quote, Chart, News: TSXV:NGH) recent financial results cast an air of doubt over the company’s near term future.

Yesterday, before market open, Nightingale reported its Q1, 2014 results. The company lost $779,629 on revenue of $3.8-million, down significantly from the $5.6-million topline the company posted in last year’s Q1.

CEO Sam Chebib, in the press release accompanying the results said the company’s transition to a SaaS model was meeting with expected volatility, but would ultimately be “worth the short-term pain”.

Li says he still believes that the opportunities that lay ahead for Nightingale are “undeniably fruitful” but that he is “vexed” by the company’s short-term outlook. He says the reason for the decline is that customers are reluctant to implement Nightingale’s new platform while waiting for the company’s delayed next-generation EMR platform, Nexia.

In a research update to clients this morning, The Industrial Alliance analyst says to reflect weaker than expected short term performance he is lowering his revenue forecast down to $16.9-million from his previous estimate of $22.8-million. He is also lowering his 2014 EBITDA expectation to $1.8-million from $6-million. The cuts result in a new target and rating: Li lowered his price target to $.50 from $.70 and re-rated the stock as a SPECULATIVE BUY instead of a STRONG BUY.

Shares of Nightingale Informatix closed today down 2.27% to $0.215.

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