FBR Capital Maintains a 'Market Perform' on LHC Group (LHCG); Post Call--When Regulatory Changes Create Major Headaches
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Price: $169.81 --0%
Rating Summary:
5 Buy, 15 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
5 Buy, 15 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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FBR Capital maintains a 'Market Perform' on LHC Group (NASDAQ: LHCG), PT $26.
FBR analyst says, "While LHC Group’s JV strategy and M&A activity add to its ability to grow volumes beyond that of the overall market, we still expect LHC Group to be challenged by the pricing environment. The company also has overhangs that are similar to its peers such as the SEC/SFC investigations, potential for rebasing in 2014, and increased regulatory scrutiny. The recent changes of face-to-face requirements and therapy documentation already threaten the more muted earnings profile that is expected in 2011. But, we also believe that the company is in the midst of adopting point-of-care solutions, which could increase the efficiency and profitability of the company over the long term. We expect the next few months to include considerable speculation on the outlook for 2012 Medicare pricing. We continue to believe the entire home health industry, despite its best lobbying efforts, is being targeted for continued cuts, and we are reflecting that factor in our estimates."
"With the challenges that lie ahead, we are reflecting higher gas prices and increased cost structure into our model. As a result, we are lowering our 2011 EPS estimate by a penny to $2.23 and our 2012 EPS estimate by $0.04 to $2.55. We note that the 2011 EPS estimate change is particularly stark when taking into account the nickel beat that the company experienced in 1Q11."
For more ratings news on LHC Group click here and for the rating history of LHC Group click here.
Shares of LHC Group closed at $28.25 yesterday.
FBR analyst says, "While LHC Group’s JV strategy and M&A activity add to its ability to grow volumes beyond that of the overall market, we still expect LHC Group to be challenged by the pricing environment. The company also has overhangs that are similar to its peers such as the SEC/SFC investigations, potential for rebasing in 2014, and increased regulatory scrutiny. The recent changes of face-to-face requirements and therapy documentation already threaten the more muted earnings profile that is expected in 2011. But, we also believe that the company is in the midst of adopting point-of-care solutions, which could increase the efficiency and profitability of the company over the long term. We expect the next few months to include considerable speculation on the outlook for 2012 Medicare pricing. We continue to believe the entire home health industry, despite its best lobbying efforts, is being targeted for continued cuts, and we are reflecting that factor in our estimates."
"With the challenges that lie ahead, we are reflecting higher gas prices and increased cost structure into our model. As a result, we are lowering our 2011 EPS estimate by a penny to $2.23 and our 2012 EPS estimate by $0.04 to $2.55. We note that the 2011 EPS estimate change is particularly stark when taking into account the nickel beat that the company experienced in 1Q11."
For more ratings news on LHC Group click here and for the rating history of LHC Group click here.
Shares of LHC Group closed at $28.25 yesterday.
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