Wells Fargo Downgrades Kindred Healthcare (KND) to Market Perform; CMS Rule Creates Overhang

Wells Fargo downgraded Kindred Healthcare (NYSE: KND) from Outperform to Market Perform, price target range $8-$9.50 from $10-$13.

Analyst, Gary Lieberman, said, "We are downgrading KND due to what we believe is a reasonable expectation that CMS’ proposed rule for LTACs, expected at the end of April, may include the -3.75% budget neutrality cut which it has proposed in the past. CMS is currently prevented by the MMSEA/ACA legislation from making that cut until 1/1/2013, but in anticipation of the expiration CMS may include the cut in its 2013 proposed rule. While we expect the LTAC industry to lobby for an extension of legislation which would prevent CMS from making the cut, we believe that the uncertainty could remain an overhang for the LTACs until at least the end of the year."

Wells raises FY12 EPS estimates from $1.43 to $1.46, establishes FY13 at $1.24.

For an analyst ratings summary and ratings history on Kindred Healthcare click here. For more ratings news on Kindred Healthcare click here.

Shares of Kindred Healthcare closed at $9.08 yesterday.

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