Morgan Keegan Reiterates Outperform on Emeritus Corp. (ESC)

Morgan Keegan is out with a research report this morning, where it reiterates its Outperform rating on Emeritus Corp. ESC; it has a $22.00 price target on the stock. The MK analysts cited the company’s recent earnings report, which beat estimates due to better-than-expected revenues and margins and lower-than-expected capital expenses. Important to note, was that same-store occupancy improved sequentially, annual pricing improved 3.1%, discounting declined, and operating margin improved markedly from depressed levels in the prior two quarters. The MK analysts raised their 2010 our 2010 CFFO estimate from $1.13 to $1.23 and the 2011 estimate from $1.42 to $1.47. As for valuation, they remarked, “Our price target for Emeritus is $22. We base this on a near-term growth-rate target P/CFFO multiple of 15 applied to our 2011 CFFO estimate of $1.47. We believe this multiple is warranted given strong near-term growth prospects given a rebound from weak occupancy and pricing in a constrained supply environment coupled with Sunwest accretion.”