Stifel Nicolaus Cuts Matria Healthcare to Hold

Analyst Thomas Carroll thinks the abrupt resignation of the company's CFO conveys uncertainty

Stifel Nicolaus downgraded Matria Healthcare (MATR) to hold from buy, after the Marietta (Ga.)-based health enhancement program provider said Thursday that its Chief Financial Officer Stephen M. Mengert has left and accepted a new position at the radio management solutions company MedSolutions.

Analyst Thomas Carroll thinks this abrupt resignation conveys uncertainty and notes that Mengert is the second senior leader to resign in five months. Chief Operating Officer Tom Hall left on October 26, 2005. The analyst also notes that Matria Healthcare is at the beginning of the integration with its recently acquired disease management services provider CorSolutions Medical, among other things. He says Mengert's absence may add to the complexity of this significant merger and the sales of other businesses. He maintains earnings per share (EPS) estimates of $1.19 in 2006 and $2.04 EPS in 2007.

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