Analysts lowered earnings projections for Magellan Health Services Inc. Tuesday, a day after the company said it lost a bid to renew a contract that generated $758 million in revenue last year.
Magellan helps health plans, employers and government agencies manage health benefits. The Avon, Conn., company said Monday the state of Arizona notified its subsidiary that it was not selected for a contract to manage the publicly funded system that delivers mental health, substance abuse and crisis services in Maricopa County, the state's most populous county.
THE OPINIONS: Goldman Sachs analyst Matthew Borsch said in a research note the news was "a significant and unexpected loss" for Magellan. He lowered his earnings-per-share estimates for the company through 2015 and reduced his 12-month price target on the stock to $50 from $55.
Citi analyst Carl McDonald called the loss a worst-case scenario in a separate note. McDonald lowered his 2014 earnings per share projection and dropped his price target to $50 from $58.
THE STOCK: Shares fell 11 percent to $47.45 Monday but rallied to climb 55 cents to $48 late Tuesday morning, while broader trading indexes climbed less than 1 percent.