Lincare's smiling

 - 
09/22/2009

Lincare's shares have risen as much as 23% since Sen. Max Baucus, D-Mont., released a draft healthcare reform bill that doesn't contain cuts to home oxygen therapy, according to an article in the Wall Street Journal yesterday.

Here's the story in full, in case you're not registered to view the Journal's stories online:

Lincare Still Rallying As Health-Care Reform Leaves Out Oxygen

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By David Benoit

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NEW YORK (Dow Jones)--Lincare Holdings Inc. (LNCR) jumped again Monday, continuing a run that's now in its sixth day after Senate Finance Committee Chairman Max Baucus released a health-care reform bill that left out the oxygen delivery industry all together.

Analysts said Lincare shares have had the reform process hanging over them for months now, as investors feared the industry would see cost increases or rates cut. But since Baucus released his plan last Wednesday, shares of Lincare have risen as much as 23%. Monday they tacked on 4% to $31.54 in recent trading, earlier rising as high as $32.40, their highest price in nearly one year. Shares hit a 52-week high of $33.37 on Sept. 22 of last year.

"Clearly there has been a lot of focus on the Senate Finance Committee and when that plan didn't have any oxygen cuts or durable medical equipment cuts, I think that was a relief to many," said Soleil analyst A.J. Rice, who has a $36 price target and sees more growth still in the stock.

Rice added that there was more speculation leading into the weekend that there would be amendments to the original bill, but so far none has materialized that would affect Lincare's business.

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Repo! The Genetic Opera hd Jefferies analyst Arthur Henderson said the concerns over cuts came from versions of reform bills that were circling the House of Representatives, as well as the budget cuts proposed earlier this year by President Barack Obama.

He said there has been a growing community of short sellers in Lincare who have likely pulled back this past week, helping to feed the rally further, though it is likely reaching its plateau.

"I would say that we are probably going to soon hit a point right around where we are now where it's probably stabilizing a bit until we get some finality on health reform," Henderson said. "But it's not overvalued by any stretch of the imagination."

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