UPDATE: ISI Group Downgrades MedAssets to Buy, Lowers PT Following Earnings Results

In a report published Thursday, ISI Group analyst Michael Cherny downgraded the rating on

from Neutral to Buy, and lowered the price target from $28.00 to $26.00. In the report, ISI Group noted, “We are downgrading MDAS from Buy to Neutral post [yesterday] afternoon's earnings results (and with MDAS shares up ~56% YTD heading into the earnings report). While we still believe MDAS to be a structural winner over the long-term (through its ability to help customers improve financial performance), given the conservative healthcare utilization environment that is likely to prevail over the next few quarters, we view the stock as range-bound until there is a return to clarity of growth. Of note, this is the first time that broad-based utilization has had as broad an impact on MDAS' results so negatively as prior utilization slowdowns were offset by improved same store sales growth as well as synergies from the Broadlane integration. In the quarter, MDAS delivered mixed results, just missing the top-line consensus while beating EPS estimates. Contracted revenue grew 1.3% y-o-y in the quarter, as RCM growth was dampened by Technology bookings, lower client volume and performance-related fees. Given the 3Q performance, management lowered FY13 revenue guidance $671-$677 MM (vs. ST of $680.6 MM) and EPS of $1.27-$1.31 (vs. ST of $1.32). In conjunction with our downgrade, we are lowering our price target from $28.00 to $26.00 (~9.5x FY15 EV/EBITDA) given our lower out-year estimates.” MedAssets closed on Wednesday at $26.07.