BB & T Capital Markets Reiterates Res-Care (RSCR) Hold Rating
March 10, 2010 9:46 AM
BB & T Capital Markets analysts K. Newton Juhng and Eugene Goldenberg maintained their Hold rating for shares of Res-Care, Inc. (Nasdaq: RSCR).
The analysts lowered their 2011 EPS estimate 4 cents to $1.11 on revenue of $1.5 billion, which is in line with Res-Care's guidance of $1.05 to $1.15 EPS on revenue of $1.6 billion.
They noted that while it's more than likely that the Medicaid funding provision for ARRA will be extended through June 30, 2011, state budgets continue to be under pressure and facing budget shortfalls and things could get worse over the next year.
The BB & T Capital Markets analysts wrote that, "2009 was a difficult year for RSCR as budgetary shortfalls put pressure on RSCR to post optimal performance. Despite management’s best efforts, both Q2’09 and Q4’09 were disappointments that were magnified by the solid earnings posted in Q1’09 and Q3’09. As we look out into 2010 and our initial forecast into 2011, we will have to wait for an inflection point when the challenges that currently are stifling earnings growth can be overcome. We will continue to look for indications that state Medicaid budgets are under less pressure and hiring cycles have returned for the broader market as these positive signs should provide a friendlier operating environment."
