Morgan Keegan Lowers Price Target On Skilled Healthcare Group (SKH)

Morgan Keegan is lowering its price target on shares of Skilled Healthcare Group SKH to $5 from $6, after the company settled some litigation against it. In the research note, Morgan Keegan writes, "The company expects to incur $9.6 million in compliance costs over the next 18 months. We have applied these costs—a combination of foregone revenues, increased operating expenses, and capital investments—to our earnings model. Consequently, we are maintaining our 2010 EPS estimate of $0.90 but lowering our 2011 estimate from $0.88 to $0.81. As a result, our target price, based on 6.5x EV/EBITDAR, drops from $6.00 to $5.00." Shares of Skilled Healthcare Group lost 4 cents or 0.88% yesterday to close at $4.48.