Retirement Companies’ Shares Tumble

CareMatrix Corp., Sunrise Assisted Living Inc. and other operators of retirement facilities saw their shares plunge Thursday after an analyst predicted government auditors will produce an unfavorable report on the industry.

CareMatrix fell 22%, Sunrise fell 8%, Alternative Living Services Inc. fell 16% and Balanced Care Corp. fell 7% after Sheryl R. Skolnick, a BancBoston Robertson Stephens analyst, said she has a “no rating” on the shares of companies in the industry because of a report expected from the General Accounting Office, the investigative arm of Congress, by April 26.

“We believe that the stocks are unlikely to be valued on a fundamental basis during this time as news of the impending and likely negative report enters the market,” Skolnick wrote.

She said she had no information on the contents of the report, to be delivered to the Senate Special Committee on Aging.

Sunrise fell $3.38 to close at $38.25 on Nasdaq; and CareMatrix fell $5.38 to close at $18.63, Alternative Living fell $4.06 to close at $21.81 and Balanced Care fell 50 cents to close at $6.25, all on the American Stock Exchange.

Other analysts saw the drops as an opportunity for investors.

“The sell-off is unwarranted because the risks aren’t as large, vast or have the impact that one of my competitors is saying,” said Peter Martin, an industry analyst with Jefferies & Co.

Martin said the GAO report will probably say seniors don’t receive enough information to make an informed decision on housing and quality of care.

“The worst we’re going to see is a disclosure form and perhaps the formation of another committee on quality, which would take another three years and waste another $1 million of the taxpayers’ money,” he said.