Lehman: Still Bullish on PacifiCare

Analyst Lawrence Marsh says an approved Medicare bill is likely driving the healthcare company's stronger projections

Lehman Brothers raised its target price on PacifiCare Health (PHSY ), and reiterated its buy rating.

Analyst Lawrence Marsh says the healthcare provider's results are well above his estimate. He cites some improvement in costs, plus the company's very modest previous guidance. Marsh also notes that the company's cash reserves are not compromised as an increase of $130 million compares to increased revenues of $175 million. Marsh sees his $2.30 2001 EPS estimate going to, at the least, PacifiCare's $2.94 guidance. He also says the recent passage of a Medicare giveback bill seems to be the main catalyst for stronger projections. He raised his $35 target to $45, but says he will not raise his estimates until after the company's conference call Wednesday.

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