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Thursday, December 30, 2010

IPC The Hospitalist Company's (NASDAQ:IPCM) HIMS Acquisition Pure Upside in 2011

Saying the size and timing of the acquisition of HIMS by IPC The Hospitalist Company (NASDAQ:IPCM) positions them for "pure" upside for their EPS estimate, Kaufman raised it, while added they've secured growth in 2011 from a range of 25 percent to 30 percent.

Kaufman noted, "We now look for 2011E EPS growth of 27%. Similar to the SCOC transaction (announced on 12/1/10), based on the size and the timing so late in 2010, the HIMS acquisition represents virtually "pure" upside to our 2011E EPS expectation, where we pre-layered $20M in acquisition spend throughout the year that we still expect to occur. As a result, we are raising our 2011E EPS by $0.05 to $1.83. In our view, IPC has secured its 2011 growth in the 25%-30% range with the flurry of acquisition activity in 4Q10, and while we think it is prudent to maintain a PEG discount based on the DOJ investigation, we are comfortable with a multiple in line with its current earnings growth rate (i.e., 2010 in the 23%-24% range)."

Kaufman Bros. maintains a "Buy" rating on IPC The Hospitalist Company, which closed Wednesday at $38.65, gaining $0.45, or 1.18 percent. Kaufman raised their price target on them from $36 to $43.

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