CardioNet rises as analyst expects greater revenue

NEW YORK -- Shares of CardioNet Inc. rose Wednesday after an analyst upgraded the stock, saying commercial health insurers are paying CardioNet more money than Medicare.

CardioNet makes wireless heart-monitoring devices. Jefferies and Co. analyst Joshua Jennings said health insurers have not cut reimbursement rates as steeply as Medicare did last year. As a result, CardioNet stands to post more revenue than he had expected from commercial insurers. Jennings raised his revenue estimate and upgraded the stock to "Hold" from "Underperform."

In morning trading, CardioNet shares gained 29 cents, or 4.5 percent, to $6.80.

In July, Highmark Medicare Services cut its reimbursement rate for devices like CardioNet's to $754 per service from more than $1,110 per service. Jennings expected health insurers would pay about the same price. But he now thinks they will pay about $850 per service in 2010 and $800 per service next year.

As a result, he thinks the company will report $130 million in revenue this year, up from $98 million. On average analysts are forecasting $137.1 million, according to Thomson Reuters.

Jennings boosted his price target to $7 per share from $4. Shares of the Conshohocken, Pa., company traded close to $30 a year ago, but the stock declined in the following months and plunged in July after CardioNet disclosed the Medicare rate cuts. The shares last traded at $7 in October, and they hit an annual low of $4.22 in December.