Alliance Healthcare Downgraded On Imaging, Prices

NEW YORK (AP) — An RBC Capital Markets analyst downgraded shares of Alliance Healthcare Services Inc. Thursday, saying its diagnostic imaging volume will stay low due to the weak economy, and Medicare reimbursement should remain under pressure.

THE OPINION: Alliance provides diagnostic imaging and cancer-treating radiation services. Analyst Kevin Ellich downgraded the stock to "Sector Perform" from "Outperform" and trimmed his price target to $6 from $7, saying he thinks scanning volume and prices will not improve in the next few quarters. Ellich said scanning volume is down because of the weak economy, and since unemployment is holding steady, volumes should stay low. He thinks commercial reimbursement rates should be stable but Medicare rates may remain under pressure.

Ellich added that Alliance has enough cash to expand its business, and acquisitions could boost its stock, but its potential targets are not well priced now.

THE STOCK: Shares of the Newport Beach, Calif., company slipped 8 cents to $4.98 in midday trading. The stock has traded between $4.69 and $7.65 over the last year.

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