2011/2012 Estimates Reduced On HealthSouth Corp.

JP Morgan has published a research report on HealthSouth Corporation HLS after the company's 3Q results. In the report, JP Morgan writes "We are updating our HLS earnings model post the company's 3Q10 report. Our 2010 estimate is unchanged at $1.75 as the fourth quarter now includes approximately $0.03 in incremental interest cost, offsetting the $0.03/share beat in 3Q. Our '11 and '12 estimates are being reduced by $0.15/share each to $1.80 and $1.95 as we adjust our model for the company's recent financing transactions which refinanced term loans due in '13 and '15 with new senior notes due '18 and '22 as well borrowings under a new credit facility. Our price target is $20/share which assumes a 7.5x '12E EBITDAR multiple on the base business (approximately $16) plus $3/share for the company's NOLs and $1/share for an anticipated settlement in the E&Y arbitration (now expected to occur in 1H 2011)." JP Morgan maintains its Neutral rating and $20 price target. HealthSouth Corporation closed Friday at $18.07.