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FBR Capital Maintains an 'Outperform' on Catalyst Health Solutions (CHSI); Despite Expectations for a Weak 1Q, Sticking With Outperform

April 19, 2011 8:12 AM EDT
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Price: $92.00 --0%

Rating Summary:
    3 Buy, 9 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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FBR Capital maintains an 'Outperform' on Catalyst Health Solutions (NASDAQ: CHSI), PT increased from $50 to $62.

FBR analyst says, "Our new model takes into account accretion from the Walgreens Health Initiatives (WHI) acquisition and assumes the loss of the State of Maryland employees contract at the end of 2Q12. Catalyst continues to show an affinity for making accretive transactions that have boosted the company’s overall PBM footprint and position the company well for the impending wave of blockbuster drugs going generic. In addition, the company recently dipped into the equity markets to help fund the WHI transaction, leaving open the possibility of future acquisitions by tapping into its existing line of credit.

"We are reducing our 1Q11 EPS estimate by $0.02 to $0.49 as a function of a lower gross margin profile for new business that began in January. The company should have the ability to generate better gross margin in future periods, so the 1Q11 EPS reduction is being offset with higher earnings in the back half of 2011. We also expect the recent 4.5 million secondary offering to impact 2Q11 EPS by $0.05. As a result, our 2011 EPS estimate has been lowered by $0.02 to $2.34."

For more ratings news on Catalyst Health Solutions click here and for the rating history of Catalyst Health Solutions click here.

Shares of Catalyst Health Solutions closed at $55.93 yesterday.


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