Jefferies Lowers Odyssey Healthcare to 'Hold'

Analyst Frank Morgan says despite his rating change, he thinks hospice industry fundamentals remain strong

Jefferies downgraded Odyssey Healthcare (ODSY ) to hold from buy on valuation.

On Tuesday Odyssey posted 31 cents second-quarter earnings per share. Analyst Frank Morgan says second-quarter results came in 2 cents better than his estimates, and were 3 cents above consensus estimates. He notes the results reflect Odyssey's continued execution of its growth strategy and the maturation of its hospice programs. Despite his rating change, Morgan thinks the hospice industry fundamentals remain strong.

He raised the $1.22 2003 earnings per share estimate to $1.25, and raised the $1.55 2004 earnings per share estimate to $1.60 . While Morgan thinks Odyssey's earnings per share may well exceed his estimates, he also thinks the higher estimates aren't prudent at this time. However, he'd use any weakness in Odyssey's to re-evaluate his rating.

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