Lehman Ups PacifiCare to Buy
Lehman Brothers upgraded its investment rating of managed healthcare company PacifiCare Health (PHSY ) to buy from market perform because Medicare givebacks to HMOs could boost the company's earnings per share. Pacificare stock rose to 23-3/4, up 6-1/2. Analyst Lawrence Marsh said Medicare payments, which are due to be implemented in March 2001, could boost 2001 EPS over $2.00. He noted Pacificare was a huge disappointment in 2000, with 2001 EPS estimates of $8.00 cut to $0.80 since Oct. Marsh sees EPS falling "somewhere in the broad middle."
He raised his 2001 EPS of $2.00 to $2.30. He sees the company reporting 2000 EPS of $3.99. Marsh raised his 1-year price target to $35 from $20.