Magellan Health (MGLN) Revenue Growth Will Offset Loss of Contract

This morning Magellan Health Services, Inc. (Nasdaq: MGLN) announced a large customer signed a contract with another behavioral health manager and would not renew a contract set to expire on December 31st. The contract produced $144.5 million in revenue over the first 9-month of the year.

Commenting on developments, analysts Scott Fidel of Deutsche Bank said "the loss of this contract could create a $0.30-0.35 EPS headwind in 2014, equating to 6-7% of our prior 2014 EPS estimate of $4.75."

"However," continued Fidel, "there will still be a significant revenue growth opportunity in 2014 for MGLN from duals care coordination pilots and the Medicaid expansion and we expect MGLN to be well positioned to capitalize on these opportunities which should help offset the loss of this commercial contract."

Deutsche Bank maintained a Buy rating on Magellan Health Services with a price target of $61.00.

For an analyst ratings summary and ratings history on Magellan Health Services (Nasdaq: MGLN) click here. For more ratings news on Magellan Health Services click here.

Shares of Magellan Health Services closed at $51.75 yesterday.

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