Morgan Keegan Gives Sun Healthcare Group Earnings Preview

Sun Healthcare Group SUNH will report fourth quarter earnings after the market close next Tuesday, March 1. Morgan Keegan's EPS estimate of $0.37 is $0.01 below the First Call consensus and up from $0.28 in the prior year period. Morgan Keegan's investment thesis for skilled nursing facility operators is that the new RUG-IV Medicare reimbursement system is favorable and will drive profitability in 2011. Morgan Keegan expects Sun to report strong results. Morgan Keegan believes Sun Healthcare Group can sustain above-average growth by increasing its medically complex Medicare and managed care census, providing higher-acuity short-stay services, improving operating efficiency, generating cash to pay down debt, and making selective accretive acquisitions. It expects Sun to benefit from recent changes to Medicare reimbursement. Morgan Keegan has a $17 PT and Outperform rating on SUNH SUNH closed Friday at $14.74