UPDATE: Goldman Sachs Downgrades ExamWorks Group (EXAM) to Sell

Goldman Sachs downgraded ExamWorks Group (NYSE: EXAM) from Neutral to Sell with a price target of $37.00 (from $46.00). Analyst Matthew Borsch warned of slower growth.

"Momentum in the outlook has stalled, in our view (e.g., First Call consensus for current year EBITDA growth is 11% vs. 19%/21% at this time a year/2 years ago)," said Borsch. "While currency impact may explain half of that, and EXAM cited 1Q weather as a factor, there are fundamental drivers, e.g.: (1) anti-whiplash claim legislation in the UK, (2) slower growth in the UK and Australian markets, (3) higher-than-expected costs for the ExamWorks Clinical Solutions (ECS) integration. Accordingly, we modestly reduce 2015-17 revenue and earnings estimates."

Borsch added, "While EXAM had already told investors to expect slower growth this year after strong growth in 2014 (+26%/36% revenue/EBITDA), the recent combination of top and bottom-line negative items suggests to us that firm evidence of a return to stronger growth may not be observed this year. While this may already be partly reflected in EXAM stock (-12% YTD vs. SP 500 +3%), we believe further underperformance is likely until investors get confidence that the current combination of headwinds are resolved (and/or are not indicative of a longer-lasting slowdown in growth or other issues), and can have confidence in a resumption of sustained stronger growth in the forward outlook."

For an analyst ratings summary and ratings history on ExamWorks Group click here. For more ratings news on ExamWorks Group click here.

Shares of ExamWorks Group closed at $35.75 yesterday.

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