STRM – Initiation of Buy Recommendation

By: ispeculatornew
Date posted: 12.31.2006 (12:00 am) | Write a Comment  (0 Comments)

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STRM – Streamline Health Solutions (Nasdaq) (Closing Price on Friday, 12/29/06 – $5.90)

Streamline Health Solutions (STRM) is another short term play. They have their biggest quarter in the fourth quarter and this year should be no different.

Streamline Health provides hospitals with solutions to improve their workflow and document management. The timing of their contracts makes the fourth quarter their best quarter for sales and profits. Last year they reported revenues of 6.2 million and had a profit of $0.30 in the fourth quarter. This year they should equal or surpass that.

So far this year STRM has reported revenues of 11.98 million. They have given guidance of annual revenue growth of 20%. To meet their guidance they would need to have revenues of 7.34 million in the fourth quarter. A couple of large contracts got delayed last quarter and are anticipated to be completed this quarter. Therefore, it is definitely feasible that they will meet their guidance. If they do meet their guidance I expect a nice pop in the stock price. In fact, the stock price is already creeping up in anticipation of this.

I would buy STRM up to $6.50 and look for a price target of $8.00 to $9.00. STRM has a low float and can be volatile intraday so I would use limit orders. This also means you may have a hard time buying and selling a lot of shares without influencing the stock price. I would look to sell after they report results next quarter.

Disclosure: I do not own shares of STRM.

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