Jefferies Comments On Skilled Healthcare Group; Still See Upside Potential

Jefferies continues to see good upside potential in Skilled Healthcare Group SKH shares and believe management's decision to explore its strategic options is prudent in the current environment. While Jefferies remains positive on the company's outlook on a standalone basis, and views shares favorably at current levels, it believes this review could open up an opportunity for SKH to realize fair value in a more timely manner. Last night, SKH announced that its Board of Directors has engaged a financial advisor to assist the company in exploring strategic alternatives, including a potential sale of the company's owned real estate assets or the entire company. SKH has not established a deadline for completion of the Board's review and does not intend to provide an update on the process until the Board has either completed its review or entered into a transaction. While SKH's shares have clearly moved up strongly since the company settled its legal issues in Humboldt County and the process of exploring strategic alternatives could take some time, Jefferies expects investors to view this announcement favorably and expect the stock to trade higher on this news, particularly given the 10% pullback in shares over the past week. Jefferies has a Buy rating and $17 PT on SKH SKH closed Monday at $14.02