Barclays Maintains an 'Overweight' on Laboratory Corp of America (LH); Medi-Cal Settlement a Non-Event
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Price: $100.63 +1.00%
Rating Summary:
4 Buy, 18 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 25 | New: 24
Rating Summary:
4 Buy, 18 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 25 | New: 24
Trade LH Now!
Barclays maintains an 'Overweight' on Laboratory Corporation of America (NYSE: LH), PT $115.
Barclays analyst says, "LabCorp issued an 8-K to announce that it has reached an agreement in principle to settle with California's Medicaid program for $49.5 million to resolve prior allegations that LabCorp had improperly billed the state Medicaid program. While this news is not positive, we highlight that LH had $195 million in cash on the balance sheet as of March 31 and expects to generate around $750 million in free cash flow in 2011, so, this settlement is ultimately a non-event, in our opinion. Quest settled the same matter for $241 million; however, we believe Quest's operations in California are much bigger than LH's, so, we anticipated LH being able to settle this matter for much less than Quest Diagnostics (NYSE: DGX). LH noted that the company has recorded a pre-tax charge of $34.5 million related to this matter in 2Q11 (noting that the company already recorded a $15 million reserve against this matter) and anticipates an after-tax impact of $20.7 million."
For more ratings news on Laboratory Corporation of America click here and for the rating history of Laboratory Corporation of America click here.
Shares of Laboratory Corporation of America closed at $95.73 yesterday, with a 52 week range of $71.58-$100.94.
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Barclays analyst says, "LabCorp issued an 8-K to announce that it has reached an agreement in principle to settle with California's Medicaid program for $49.5 million to resolve prior allegations that LabCorp had improperly billed the state Medicaid program. While this news is not positive, we highlight that LH had $195 million in cash on the balance sheet as of March 31 and expects to generate around $750 million in free cash flow in 2011, so, this settlement is ultimately a non-event, in our opinion. Quest settled the same matter for $241 million; however, we believe Quest's operations in California are much bigger than LH's, so, we anticipated LH being able to settle this matter for much less than Quest Diagnostics (NYSE: DGX). LH noted that the company has recorded a pre-tax charge of $34.5 million related to this matter in 2Q11 (noting that the company already recorded a $15 million reserve against this matter) and anticipates an after-tax impact of $20.7 million."
For more ratings news on Laboratory Corporation of America click here and for the rating history of Laboratory Corporation of America click here.
Shares of Laboratory Corporation of America closed at $95.73 yesterday, with a 52 week range of $71.58-$100.94.
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
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