Needham Downgrades Matria Healthcare to 'Buy'

The company warned it would miss earnings expectations due to higher costs and slumping sales in its women's healthcare group

Needham downgraded Matria Healthcare (MATR ) to buy from strong buy.

Analyst Dalton Chandler says the company expects Q4 revenue to be up a bit from his $68.6 million estimate, but expects EPS to be below his $0.29 estimate. Chandler notes the EPS shortfall is due to the company's spending to build out disease management capabilities ahead of finalizing related contracts, and a shift in the mix toward disease management away from women's healthcare, which currently has higher margins. Chandler upped his $294.4 million 2002 revenue estimate to $300 million, but cut the $1.79 2002 EPS estimate to $1.55, and trimmed the $44 target to $37 in step with guidance. Despite the near-term setback, Chandler thinks the fundamental story remains intact.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE