Morgan Keegan Rates Sun Healthcare Group At Outperform (SUNH)

Morgan Keegan has an Outperform rating and a $17 price target on shares of Sun Healthcare Group SUNH.

In a note to clients, Morgan Keegan writes, "Sun Healthcare Group reported fourth quarter EPS of $0.43, well ahead of our $0.37 estimate. As we have seen with other nursing home operators, very strong Medicare pricing (Part A per diem up 11.3% sequentially) drove stronger-than-expected revenues and margins, as the EBITDAR margin of 13.6% topped our estimate by 63 basis points. Strong inpatient operations offset weaker-than-expected rehabilitation results in the first quarter under the new Medicare RUG-IV system."

Shares of SUNH closed at $14.65 yesterday, down 5 cents.