Wachovia Lowers American Healthways to 'Buy'
Wachovia downgraded American Healthways (AMHC ) to buy from strong buy.
Analyst Joel Ray says there's no strong evidence of new contracts or other near-term catalyst to drive the stock. He says third quarter revenues are below his and the company's estimates. He notes American Healthways said it would not meet its goal of 800,000 lives under contract by the end of fiscal 2002 (Aug.). Ray believes management may now back away from predicting expected lives under contract, thereby reducing his visibility to gauge momentum. Ray says he would not be surprised to see near term weakness in shares. He raised his $0.56 fiscal 2002 earnings per share estimates to $0.57, and sees $1.03 for fiscal 2003. He also cut his $36 12-month target to $30.