As some equity researchers upgraded their recommendation for NHWK stock from neutral to buy yesterday, it must have made some investors suspicious that the stock could be currently undervalued. The share price jumped 8.24% up and closed at $3.02 on enhanced trading activity. The jump could also be considered a delayed reaction to last Thursday’s press release by the company.
It announced the availability of NightHawk Radiology’s Client Peer Review, which is according to the press release, ” the only one of its kind that provides an objective measure of effective communication and reporting accuracy based on the impact on patient outcomes”.
Though, NHWK investors do not seem much impressed by the company’s prospects recently. With a P/S ratio of only 0.49, compared to a sector P/S ratio of 4.88, the stock is not enjoying much of investor appreciation recently. This is seen also on its chart, which shows hesitant moves up and down and no clear direction of move over the last two months.
A dispute on certain agreements of the company has been settled at the end of June and NHWK sold out two of its subsidiaries. In relation to that, large part of NHWK long-term debt has been paid out, but still the low P/S ratio could be justified. During the last four quarters sales were rapidly declining. Moreover, they are expected to be further cut off, as a previous service agreement of the company has also been cut off under the settlement of the above mentioned dispute.
All this does not sound like a good fundamental base for appreciation of the stock, but its high volatility could in the future attract at least some speculators.
