Two analysts following hospital industry leader HCA Holdings have hiked their price targets for the company following its Q2 profit report. At Oppenheimer, Michael Wiederhorn now sees HCA — which ended Tuesday trading at $65.07 (Ticker: HCA) — climbing to $74 in the coming quarter. That's up from $62. Ann Hynes at Mizuho has him beat by a dollar after lifting her target to $75 from $60. Both analysts recommend investors add to their HCA holdings.
HCA Holdings released its full financial results for the second quarter Tuesday, reporting earnings in line with the company's preview released last week.
The company reported a net income of $483 million and earnings per share of $1.37, excluding a one-time reimbursement and sale gain, beating analysts' expectations by 10 cents. On a conference call with investors, the company also announced Q2 revenues of $9.23 billion. HCA Holdings cited "continued strong performance in our core business and an increased impact from health reform" for the better-than-expected results.
Overall admissions in the quarter increased 2.3 percent, and revenue per equivalent admission increased 5.4 percent. The company reported decreases in uninsured patients in all markets, particularly in the states that have expanded Medicaid.
"We have seen a 32 percent increase in Medicaid admissions and a corresponding 48 percent decline in uninsured admissions year to date in our four expansion states," said Bill Rutherford, HCA Holdings CFO. "It is interesting to note that uninsured volume for non-expansion states has also declined just under 2 percent."
On the conference call, Rutherford also said the acuity of patients who purchased insurance on the federal and state exchanges was about 10 percent higher than HCA's managed care population. But the acuity and admission increases are expected to taper off as health reform progresses, he added.
President Milton Johnson announced the company has finalized exchange contracts with UnitedHealthcare for all of HCA's Texas markets. The company is also in discussions with "all the major health plans" regarding exchange contracting for 2015, including expansion of exchange networks and new products.
Shares of HCA (Ticker: HCA) are up slightly to $64.38. Year to date, they're up nearly 35 percent.
Local RBC Capital health care analyst Frank Morgan has hiked his price target for shares of LifePoint Hospitals waaaaaaay up to $89 from $63 following the company's blowout second-quarter earnings report. Morgan says health care reform is driving most of the good numbers but he likes the improved visibility into the company's operations and continues to rate the stock an 'outperform.' LifePoint shares (Ticker: LPNT) have climbed to $74 from $65 since its report but Morgan isn't the only one who sees them rising further. Over at UBS Securities, A.J. Rice has raised his target to $80 from $73.
Put Avondale Partners analyst Mark Montagna among the group of market watchers that thinks Dollar General will actually be a beneficiary of the planned Dollar Tree-Family Dollar combination. In a note to clients, Montagna writes that same-store sales at Goodlettsville-based Dollar General should get boost from the disruption of Dollar Tree's deal for up to three and a half years. He adds that gross margins, which have been slipping due to pricing pressures and the rollout of lower-margin tobacco products, should bottom out this quarter and rise all the way through 2016.
DLTR is likely to take charge of what it deems necessary for adjusting store inventory by category and product line, which should include inserting some of its successful merchandise priced at $1 and below. Such changes are likely to lead to store manager turnover, changing merchandise selection, and general customer confusion over what exactly they can count on FDO carrying.
Montagna rates Dollar General (Ticker: DG) a 'market outperform' and sees it climbing to $65 from its current level of $56 and change.
Shares of Dollar General are having a wild and woolly Monday after rivals Dollar Tree and Family Dollar said they will join forces in a $9.2 billion deal. After opening down a good bit from its Friday close, the stock (Ticker: DG) rose steadily as several market watchers disseminated some ho-hum opinions of Dollar Tree's purchase plans, then retreated again to enter the final half hour of trading down slightly from Friday. Volume is on track to be more than four times the daily average.
What that says about overall investor sentiment is hard to pin down. But options traders are more optimistic now about the Goodlettsville-based company's shares than at any point in the past year. The pros at Schaeffer's Investment Research have the numbers.
Two of Dollar General's biggest competitors are set to join forces via an acquisition worth $9.2 billion. Dollar Tree plans to buy beleaguered Family Dollar to create a company with more stores than and roughly the same sales than Goodlettsville-based Dollar General.
"This is a transformational opportunity," stated Bob Sasser, Dollar Tree's Chief Executive Officer. "With the acquisition of Family Dollar Stores, Dollar Tree will become a leading discount retailer in North America, with over 13,000 stores in 48 states and five Canadian Provinces, sales of over $18 billion, and more than 145,000 associates on our team. We will continue to operate under the Dollar Tree, Deals, and Dollar Tree Canada brands, and when this transaction is complete, we will operate under the Family Dollar brand as well."
Shares of Dollar General (Ticker: DG) are down 3.6 percent in pre-market trading.
SEE ALSO: One more time, mulling a Dollar General-Family Dollar deal from last month