IPC Gets Subpoenaed; Jefferies Doesn't Care, Reiterates Buy (IPC)

IPC The Hospitalist Co. IPCM filed an 8-K yesterday, reporting it was subpoenaed by the US Attorney's Office for the Northern District of Illinois. Jefferies analysts Arthur Henderson, Brian Tanquilut, and Paxton Scott believe this is routine for companies who derive a substantial amount of revenue from Medicare. (IPC makes about 40% of their revenue from Medicare.) The analysts said, "We believe the sell-off in IPCM shares is overdone, particularly given our view that healthcare services providers who do enough government business inevitably receive subpoenas as part of the normal course of business. And just like the subpoenas that have been issued against other healthcare services providers such as DaVita DVA ($62.36, Buy), Gentiva GTIV ($26.29, Buy), and Almost Family AFAM ($34.81, Buy), we do not view this subpoena as any indication of fraudulent or irregular operating practices." IPCM is rated Buy by Jefferies & Company, with a price target of $35.00. IPCM is currently trading at $23.17.