UPDATE: Goldman Sachs Raises PT to $51, Maintains Sell on Magellan Health Services

Goldman Sachs reiterated its Sell rating on Magellan Health Services

but raised its price target from $46 to $51 on favorable cost trends. Goldman Sachs commented, "3Q earnings upside was primarily driven by margin expansion as Magellan benefitted from favorable cost trends in the behavioral health segment. Management sees “solid” segment profit growth for next year relative to a 2012 baseline of $240-$245 mn, which excludes prior year developments. [W]e now see somewhat lower procurement risk to the company's Maricopa behavioral health contract, as detail from the recently released RFP (worth $1 bn in annual revenue, including physical health) suggests that Magellan's joint venture with Vanguard Health Systems should not be at any disadvantage in the bidding process." Magellan Health Services closed at $50.69 on Friday.