Analyst Eric Percher says cost controls enabled Lincare to report earnings per share above his and consensus estimates of 56 cents. He notes the provider of respiratory therapy services has demonstrated its ability to dramatically reduce costs (in short order), and expects further belt tightening will occur throughout 2004.
Percher raised the $2.42 2004 earnings per share estimate to $2.64, and upped the $1.91 2005 estimate to $2.04. He thinks Lincare shares currently reflect a worst-case reimbursement scenario. Medicare reimbursement reductions for respiratory medications took effect in 2004. He based his outperform rating on his valuation of the core oxygen business (reflected in the 2005 estimate). Percher has a $41 12-month target.