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Bear Of The Day: Catasys (OTRK)

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Ontrak (OTRK - Free Report) is a Zacks Rank #5 (Strong Sell) and today the stock finds itself as the Bear of the Day.  Let's take a look at why a stock that recently beat earnings and has a great chart could have the lowest Rank.

Description

Ontrak, Inc. is an AI and telehealth enabled, virtualized outpatient healthcare treatment company. The company's Predict-Recommend-Engage(TM) platform predicts people whose chronic disease will improve with behavior change, recommends effective care pathways. Ontrak, Inc., formerly known as Catasys Inc., is based in United States.

Earnings History

Normally a stock with a Zacks Rank #5 (Strong Sell) will have an earnings miss in the most recent quarter.  That is not the case here with OTRK posting a beat, but that beat was preceeded by three straight misses.

THe most recent quarter saw the company post a los of 24 cents when a loss of 28 cents was expected.  That four cent beat translates into a positive earnings surprise of 14%.

Estimate Revisions

The Zacks Rank is focused on the movement of earnings estimates.  I see the estiamtes for the current quarter falling 2 cents.  That isn't enough to send the stock to the lowest Zacks Rank but it doesn't help.

The full year numbers have slipped from a loss of 80 cents to a loss of 87 cents.

Keep in mind the recent quarter was beat of 4 cents, so this could be a case of pulling some earnings forward.

Valuation

OTRK is running a loss so there is no PE or forward PE to lean on.  What I do see is a lot of growth, with 124% topline growth in the most recent quarter.  A price to sales multiple of 23x is awfully high, but we know that growth investors are willing to pay big multiples for solid growth and this name has it.

Chart

 

Catasys Inc. Price, Consensus and EPS Surprise

Catasys Inc. Price, Consensus and EPS Surprise

Catasys Inc. price-consensus-eps-surprise-chart | Catasys Inc. Quote

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