SXC Health Guidance Hike Could Be In The Cards
August 05 2009 - 2:43PM
Dow Jones News
SXC Health Solutions Corp. (SXCI) reports its second-quarter
results Thursday and a guidance increase could be in the cards.
"They should be able to guide up for the full year because
they've announced a couple of contracts that weren't included in
previous guidance," said Paradigm Capital's Gabriel Leung.
SXC, of Lisle, Ill., is a pharmacy-benefits-management provider.
The company recently signed agreements to provide PBM services to
the Ohio Bureau of Workers' Compensation and to the Presbyterian
Health Plan.
SXC has already raised its 2009 guidance once. In May, the
company said it sees non-GAAP earnings of $1.13 -$1.21 a share on
revenue of $1.25-$1.35 billion. Its previous estimates were for net
of 99 cents to $1.08 on revenue of $1.2-$1.3 billion.
Leung has built a guidance increase into his forecast and is the
highest on the Street with a non-GAAP-earnings estimate of $1.28 a
share on revenue of $1.4 billion. The mean 2009 analyst estimate is
for $1.14 on revenue of $1.295 billion, according to FactSet.
If SXC hikes its guidance Thursday, it would be following the
lead of its peers. Late Wednesday, Catalyst Health Solutions (CHSI)
raised its share-earnings guidance to $1.45-$1.50 from $1.35-$1.45.
The company's stock is up 4% to $26.90 on Nasdaq Wednesday. On July
29, Medco Health Solutions Inc. (MHS) and Express Scripts Inc.
(ESRX) both raised their 2009 earnings guidance. Medco's stock
climbed 4% that day on Nasdaq, while Express Scripts' stock rose
marginally.
SXC's stock was one of the best performers on the Toronto Stock
Exchange last year, rising 56% to C$22.74. The stock has continued
its ascendance in 2009 and is up about 40% year to date, though it
is down slightly Wednesday.
SXC trades at 10 times enterprise value to EBITDA based on 2010
estimates, Leung said. That's a slight premium to its peer group,
which trades at an average of 9 times EV/EBITDA, he said.
Leung said he believes SXC's stock is building in a good quarter
and investors will be awaiting the company's commentary on deal
flow before deciding whether to take the stock higher. If the
company forecasts an acceleration in deal flow, or its guidance
"blows away" the Street, analysts will raise estimates, making the
stock more attractive, he said.
Leung doesn't own SXC shares and there are no banking conflicts
between Paradigm and SXC.
Company Web Site: http://www.sxc.com
-Stuart Weinberg, Dow Jones Newswires; 416-306-2026;
stuart.weinberg@dowjones.com