Morgan Stanley downgraded Athenahealth, Inc (NASDAQ: ATHN) to Equal-Weight from Overweight as the company’s transition to value-based system is weighing on bookings and revenue growth.

Amid declining government subsidies and reimbursement pressures, Athena is shifting its focus to develop services that enhance end customers' productivity, and better integrate it with the current athenaONE suite.

“We expect these updated offerings will have longer sales cycles, at least in the early days. In addition, as booking growth becomes increasingly weighted toward population health and hospitals, average implementation and revenue conversion cycles should lengthen further, augmenting a slowing topline,” analyst Ricky Goldwasser wrote in a note.

However, Goldwasser sees moderating revenues near to mid-term. The analyst now expects revenue growth at about 9 to 15 percent in the near to mid-term, while longer-term revenue stream looks "riskier" than earlier assumptions.

Goldwasser currently projects revenue growth of 15/12 percent in 2017/2018 compared to previous forecast of 20 percent.

“In our model, 2017 revenue growth still benefits from 2015 enterprise deal (Trinity) pull thru, but by 2018, we expect topline growth to slow down to 9% to 12%,” Goldwasser highlighted.

Longer term, the analyst believes Athena can return to high teens growth as new offering gains traction with core small group clients.

“Slower growth should be partially offset by a leaner cost structure, translating to 2017/18 EPS of $2.13/$2.49, or 19% and 17% growth, down from 24% and 23% previously,” Goldwasser noted.

Goldwasser cut his price target to $117 from $153. The stock was down about 2.88 percent to $105.25.

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