Zacks Investment Research downgraded shares of Merge Healthcare Incorporated (MRGE) from NEUTRAL to UNDERPERFORM on March 24, 2014, with a target price of $2.25.
Merge's reported fourth-quarter 2013 adjusted earnings per share of $0.03, rebounding from the $0.04 per share loss incurred in the year-ago quarter. Revenues declined 17.2% to $53.9 million lagging the Zacks Consensus Estimate of $58 million. A dismal performance over the past few quarters and falsification of the company's subscription backlog figures by a former sales employee in its eClinical business raised negative sentiments among investors. Notably, the growth prospects of the company are highly dependent on the capital investment environment at hospitals and reimbursement rates. Further, in both ambulatory and the acute hospital settings, several external pressures forced the customers to defer spending. With the dearth of any near-term catalyst to boost the stock price up, we downgrade the stock to Underperform.
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