Irvine-based Sun Healthcare Group Inc. saw its summer rally stunted on Tuesday a day after an analyst downgraded the nursing home operator.
Sun Healthcare’s shares fell as much as 10% at the start of trading before gaining back ground and closing down about 1%.
The company, which worked its way through bankruptcy in the late 1990s, counts a market value of about $325 million and yearly sales of about $900 million.
UBS Investment Research analyst Donald H. Hooker downgraded Sun to “neutral” from “buy.”
Hooker cited a recent run-up in Sun’s shares for the downgrade. The stock is up about 15% in recent weeks, spurred by a strong quarterly report on Aug. 2. For the year, the shares are up about 50%.
Sun could bolster operations by offering more care for Alzheimer’s patients and installing new computers and software to manage costs, according to Hooker.
Recent increases in Medicaid reimbursement could help Sun in the fourth quarter, he said.
Sun runs about 100 nursing homes facilities in 13 states.
