UPDATE: Stifel Nicolaus Initiates WageWorks with Buy, $15 PT; Rising Healthcare Cost Opportunity

Stifel Nicolaus initiates its coverage on WageWorks WAGE with a Buy rating and a price target of $15. Stifel Nicolaus says, "The cost of healthcare and commuting to work is far outpacing inflation. Employers are pushing an increasing amount of the healthcare burden down to the employee and are looking for opportunities to mitigate the impact. …With the initiation of a Flexible Spending Account (FSA) cap in 2013, there is a compelling argument to remove the “use it or lose it” provision, which prevents unused funds to be rolled over for use in subsequent years. This provision is considered one of the biggest obstacles to driving incremental market penetration (currently in the low-mid 20s). While difficult to gauge timing and magnitude, we estimate the repeal could potentially add meaningfully to annuity EBITDA and FCF." WAGE closed at $10.80 on Friday.