Shareholders of the pharmacy benefits manager Catamaran overreacted last month to the possible demise of its relationship with a major health insurer, according to BMO Capital Markets, which raised its rating on the stock.
Analyst Jennifer Lynch still sees value in Catmaran even if Cigna Corp. decides to take its business elsewhere, or moves it in-house.
Cigna is one of the largest health insurers in the United States.
"The drawn-out Cigna deliberation process has taken its toll on Catamaran, and we believe that closure of any kind will remove an overhang from the valuation, serving as a near-term catalyst for shares," Lynch wrote in a research note released Sunday.
Catamaran Corp. will likely attract business next year when the health care overhaul expands coverage to millions of uninsured Americans, Lynch said. That includes an expansion of the state-federal Medicaid program for the poor and disabled people in states where Catamaran already serves several health plans.
Pharmacy benefit managers run prescription drug plans for employers, government agencies and other clients, using their large purchasing power to negotiate on price. They make money by reducing costs for health plan sponsors and members. Catamaran also provides health care information technology services.
Lynch raised her rating on the Lisle, Ill., company to "outperform" from "market perform."
The stock climbed 80 cents to $50.02 Monday before markets opened. The price dropped nearly 15 percent last month.