DA Davidson Cuts Price Target on Skilled Healthcare Group (SKH) Following New Guidance

DA Davidson is maintaining its Buy rating on shares of Skilled Healthcare Group (NYSE: SKH) and is reducing its price target by $1 to $7.

The company had suspended its previous 2011 guidance following its second quarter earnings, but has reinstated it now with a revenue range of $865-$870 million and an EPS range of $1.07-$1.12.

Management forecasts that its revenues will be affected negatively by roughly $45 million due to the new Centers for Medicare and Medicaid Services rule changes and recent reductions in Medicaid rates.

SKH also believes that they will be able to cancel out around $15 million of the impact through cost savings and productivity improvements.

The firm is now currently estimates EPS of $1.12 and $0.80 for 2011 and 2012. DA Davidson's revenue estimates for the two years are $868 million and $845 million.

For more ratings news on Skilled Healthcare Group click here and for the rating history of Skilled Healthcare Group click here.

Shares of Skilled Healthcare Group closed at $5.14 yesterday.

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