Goldman Sachs Resumes Coverage on SXC Health Solutions (SXCI) at Buy; Strong Growth Beyond Integration

July 6, 2012 2:23 PM EDT
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Price: $93.02 --0%

Rating Summary:
    13 Buy, 6 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 35 | Down: 31 | New: 11
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Goldman Sachs resumes coverage on SXC Health Solutions (NASDAQ: SXCI) with a Buy. PT $120.00.

Analyst, Robert P. Jones, said, "Beyond nearly doubling revenue/EBITDA, the additional scale should allow SXC to be more competitive. While there are clear benefits from this deal, the more important issue is appropriate valuation given the larger base to grow off of and comps from the top PBM operators. Under our assumptions, we believe SXC can grow earnings beyond the integration period at 19%, which doesn’t include additional M&A, something management has been clear is still very much part of the story."

Jones lowers FY12 EPS estimate from $2.43 to $2.40, but raises FY13 from $3.19 to $3.74, and FY14 from $3.89 to $5.04. He believes SXC can get about $1 billion in net new business wins each year (about 1%) from top PBM businesses like Express Scripts (Nasdaq: ESRX)(Conviction-List Buy) and CVS (NYSE: CVS)(Buy).

For an analyst ratings summary and ratings history on SXC Health Solutions click here. For more ratings news on SXC Health Solutions click here.

Shares of SXC Health Solutions closed at $96.37 yesterday.

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