Healthways Inc.'s shares soared Monday after two Piper Jaffray analysts upgraded their rating on the company's stock and gave an upbeat assessment of the specialty health care company's growth potential.
THE SPARK: Analysts Sean Wieland and Mohan Naidu upgraded their rating on Healthways to "Overweight" from "Neutral" and raised their price target from $11 to $19. The analysts did not update their earnings estimates.
THE BIG PICTURE: Healthways, based in Franklin, Tenn., provides wellness and disease prevention services for patients via health plans, hospitals, government programs and others. The analysts said the company is an expert in population health management, yet has less than a 1 percent market share in a $1 billion per year opportunity.
THE ANALYSIS: The Piper Jaffray analysts said in a research note that they believe Healthways will be a leader in the growing population health management niche, which is an effort to improve care of patients on broader level.
Healthways, according to the analysts, has spent decades assembling a data-driven platform using clinical, administrative and self-reported data that not only solves for the best pathway for patients needing treatment, but also prevents disease and reduces variation, redundancy and fraud.
The analysts also said that more health care providers are investing in organizations that help providers better communicate and coordinate care to patients. Every one of these organizations needs a population health management strategy, which creates more potential opportunities for Healthways.
A representative for the company had no comment on the report, citing company policy.
SHARE ACTION: Shares jumped more than 10 percent to close at $14.86 and hit a new 52-week trading high at $14.97 earlier in the day. The company's stock value has doubled since this time last year.