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UBS Warburg downgraded IMS Health (RX
) to neutral from buy.
Analyst Howard Capek says he's downgrading IMS because its share price has recently been within 10% of his $18 target. He ties recent share price performance to expectations for better margin trends in the second half of the year. Also, he cited the recurring nature of the company's core sales, and management's prudent capital spending with regard to fill-in acquisitions and share repurchases.
However, absent a re-accelerating revenue growth component, Capek finds it difficult to forecast higher earnings, and subsequently argues a higher share valuation. He maintains his $1.02 2003 earnings per share, and $1.10 2004 estimates.