Morgan Keegan Outperform On Sun Healthcare Group (SUNH)

Morgan Keegan has written a research report on shares of Sun Healthcare Group SUNH and rates the shares at Outperform after the company reported second quarter earnings yesterday. Morgan Keegan has a fair value target on shares at $10.55 In the report, Morgan Keegan writes, "We believe that the growth prospects for Sun remain favorable, as we feel the company is positioned to take advantage of the new RUG-IV reimbursement system, expanding its census of higher-acuity, higher-revenue, higher-margin short-stay medically complex patients. Using last night's share price to estimate the size of the company's proposed $160 million share offering, and the valuation methodology described in our July 1 report (8x EPS for the operating company, 9x FFO for the REIT), we arrive at a fair value for the post-split components of $10.55, well above last night's close." Shares of Sun Healthcare Group are indicated higher this morning to $7.91.