Ahead of the Bell: SXC Health Solutions

William Blair analyst upgrades SXC Health Solutions citing potential for business growth

• On 8:04 am EDT, Wednesday September 9, 2009

NEW YORK (AP) -- A William Blair & Co. analyst upgraded shares of pharmacy benefits manager SXC Health Solutions Corp., saying new business could boost its earnings.

Analyst Amanda Murphy upgraded the stock to "Outperform" from "Market Perform", citing the company's ability to win new business following the close of its buyout of National Medical Health Card Systems Inc. last year.

"Our concern that the smaller PBMs might face a tough 2010 selling season in a weak economy does not appear to have played out," Murphy said, in a note to investors.

The stock has more than doubled year-to-date, she said, but there is likely still further room for earnings upside in 2009 and 2010.

"We have been very encouraged by SXC's results year-to-date, including the company's continued ability to derive value from its acquisition of NMHC, particularly in securing improved purchasing terms across the value chain, as well as its ability to win new business as a combined entity," she said.

Also, she said, conversations with management have been positive.

"Management's upbeat tone suggested the company is well positioned to win new business in the 2010 selling season, which has bolstered our outlook for the company over the next year."

Shares of Lisle, Ill.-based SXC closed at $41.89 Tuesday.

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