Jefferies Reiterates Buy Rating on Emergency Medical Services (EMS)

Jefferies & Company is out with a research report this morning, where it reiterates its Buy rating on Emergency Medical Services EMS: it has a price target of $63.00 on the stock. The Jefferies analysts cited the company's recently reported quarterly earnings, which were plagued by $0.04 worth of extraordinary employee medical claim charges. These charges, which accounting rules do not regard as extraordinary or one-time in nature, prompted management to lower its FY10 EBITDA and EPS guidance to $317-$322MM (from $321-$328MM) and $3.20-$3.26 (from $3.20-$3.30), respectively. The analysts believe the exodus of momentum investors has presented fundamental-focused investors a compelling opportunity to build positions in the stock of a company that is poised for robust long-term growth and potential near-term outperformance. As for valuation, the analysts remarked, “The good news out of yesterday's sell-off is that the EMS valuation has become more attractive at 6.9x FY11 EBITDA. Our PT of $63 is based on applying an 8x multiple, which represents the midpoint valuation of our coverage universe. Risks: unforeseen contract losses.”