Morgan Keegan Reiterates Outperform Rating on RehabCare Group (RHB)

Morgan Keegan is out with a research report this morning, where it reiterates its Outperform rating on RehabCare Group RHB; it has a $29.00 price target on the stock. The MK analysts cited the company’s recent earnings report, which came in below estimates. They noted that both the HRS and SRS division had revenues and margins in excess of our estimates, but weak discharges to the company's Hospitals division resulted in lower-than-expected revenues and margins. They added that the company’s guidance continues to call for continued volume pressures, resulting in lower Hospital division revenues and margins for the remainder of the year. As for valuation, they remarked, “Even with this significantly lower negative-case projection, RehabCare shares are still trading at only 9 times our 2011 estimate. We still like the shares' longer-term prospects.”