UPDATE: Credit Suisse Lowering Price Target on Sun Healthcare

Credit Suisse is out with a research report on Sun Healthcare Group SUNH and is lowering its price target to $3 from $4 and it has a Neutral rating on shares. In a note to clients, Credit Suisse writes, "SUNH provided updated 2011 guidance, and its expectations for the impact of the previously announced Medicare payment cut and changes to group therapy. Updated 2011 EPS guidance of $0.83-$0.94 now reflects the cut as well as changes to group therapy. The magnitude of the impact to 2012 is not considerably higher than our original estimate, but still slightly worse. As a result, we are lowering our 2011 and 2012 EPS to incorporate the changes, and lowering our TP to $3 (from $4). We maintain that any further cuts stemming from budget deficit discussions could have significant negative consequences for SUNH and the SNF industry." Shares of SUNH closed at $2.70 on Friday.