Emageon, Inc. (EMAG)

KatWoman50 (67.67) Submitted: 1/11/2007 2:01:20 PM : Start Price: $15.90 EMAG Score: -74.72

Looks like market over reaction. The company guidance has changed based on excluding the assumption of potential acquisition. That doesn't mean that there isn't a possibility of a merger, simply that the forward guidance isn't factoring this in anymore. If insiders are buying as Penny says, that is more of a signal of something in the works. Is the guidance change a red herring to allow insiders to buy at a more attractive price? 8-10% organic growth isn't terrible and a "lowered" target of $20 makes $12 a nice entry point.

1/9 "On Monday, Emageon said it expected a 2007 profit of 24 cents to 29 cents per share on revenue from current business of $136 million to $140 million. From this point forward, Emageon's outlook includes its organic business and excludes assumptions related to potential acquisitions.

Wall Street, on average, predicted 58 cents per share on sales of $163.4 million, according to Thomson Financial.

Wachovia analyst Matt Perry downgraded Emageon shares to "Market Perform" from "Outperform," saying that organic growth has been slower than expected. Perry said he expected 2007 organic growth of 15 percent to 20 percent, while the company's guidance implied 8 percent to 12 percent growth.

"We believe the road to outperformance will be much bumpier and that a failure to execute on a merger and acquisition deal over the next few quarters could lead to lackluster stock performance," Perry wrote in a client note.

Friedman, Billings, Ramsey & Co. analyst James Kumpel kept an "Outperform" rating and lowered his price target by $3 to $20. Kumpel said Emageon's guidance shows a modest top-line with meaningful operating growth.

Kumpel warned that investors may be confused when comparing numbers to Wall Street estimates if they miss the change to revenue and included expenses.

"It is important to note that from this point forward, guidance reflects only organic growth expectations and ignores potential future acquisitions," Kumpel wrote in a client note."