Citigroup Raises PT On Sun Healthcare Group To $17

Citigroup has published a research report on Sun Healthcare Group SUNH and has introduced new 2013 estimates on the company.

In the report, Citigroup writes "4Q10 results from SUNH and the other nursing home operators only whetted our appetite for the RUGSIV revenue opportunity that is likely to play out to a larger degree than the 2006-2009 RUGSIII trajectory. We believe an opportunity exists for short-stay MDCR SNF operators to steal patient referrals from LTACs over the next several years. We believe SUNH can grow its average MDCR per diem faster than 5% annually. In the near-term, we're hanging out at the low-end of 2011 guidance in order to be sufficiently cautious with respect to mid-year MDCD rate cuts (we model down 2.5% for 2H11 vs mngt's flat outlook and hope mngt is correct)."

Citigroup maintains its Buy rating and has raised the price target from $14 to $17.

Sun Healthcare Group closed Friday at $13.76.