KeyBanc Starts Air Methods (AIRM) at Buy

KeyBanc initiates coverage on Air Methods (NASDAQ: AIRM) with a Buy rating and a price target of $63.00.

Analyst Jason Gurda said, "AIRM has a proven record of generating strong revenue and earnings growth through pricing power, adding new hospital and community clients and M&A, in our view. Looking forward, we expect high single-digit, low double-digit organic revenue and EBITDA growth, with significant upside potential from M&A and healthcare reform. Using our 2014 estimates, we calculate AIRM’s fiveyear EBITDA and EPS CAGRs at 32% and 29%, respectively."

"With very high fixed costs, small percentage changes in AIRM’s transport volumes and payer mix can create significant volatility in quarterly earnings, which leads to AIRM frequently missing or beating consensus expectations by a large margin. For example, earnings in 2013 were down due to severe weather in the 1H and 4Q, and unexpectedly high maintenance costs; however, transport volumes in 2014 are off to a more stable start, and we expect EBITDA growth of 40% and EPS growth of 75% off of 2013’s depressed results," he added.

For an analyst ratings summary and ratings history on Air Methods click here. For more ratings news on Air Methods click here.

Shares of Air Methods closed at $47.45 yesterday.

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