Analyst Paula Torch at Avondale Partners says investors should take advantage of the little drop in shares of HCA Holdings since the hospital giant’s second-quarter profit report and conference call. Torch says HCA executives’ comments about the impact of health care reform may have led to the 7 percent intraday drop in HCA shares (Ticker: HCA) Wednesday. (They rebounded later in the day but gave up another 1 percent Thursday.)
Torch says not to pay any mind to that. HCA’s operations are on track, with strong volume trends offsetting a little pricing softness. On top of that, she said, the company’s financial muscle will continue to give it the option to add to that growth via M&A.
While HCA continues to utilize free cash flow to pay down its long-term debt, Management stressed that they have the flexibility to lever up to 3.5x to 4.5x to maintain its active acquisition pipeline, especially in the outpatient space.
Torch’s target for HCA shares, which closed Thursday’s trading at $91.38, is $103.
Paula Torch at Avondale Partners really likes the look of AmSurg following the surgery center and physician services company's second-quarter profit report. The integration of the Sheridan physician services business is running smoothly, she says, while organic growth is topping expectations and the acquisition pipeline is solid. In response, Torch has hiked her price target for AmSurg (Ticker: AMSG) all the way to $90 from $74. After popping this week on the heels of the Q2 report, AmSurg is changing hands Thursday morning at almost $84.
Given the 1H performance and Management's execution thus far, 2015 guidance could still wind up being conservative as we expect strong ASC and PS metrics to continue. Furthermore, we feel more comfortable with AMSG's cross-selling initiatives, which are above internal expectations and its ability to execute on JV partnerships.
RBC Capital Markets analyst Brad Heffern has reiterated his 'outperform' rating on shares of Delek US Holdings in the wake of the company's Q2 earnings report. But he has lifted his price target for the Brentwood-based company to $44 from $42. That leaves more than 25 percent of upside from where Delek (Ticker: DK) is changing hands Thursday morning.
Community Health Systems executives and their peers at the Metro Health hospital system in the Grand Rapids region have pulled the plug on a planned $260 million acquisition by the locally based industry leader. The parties' talks were first made public almost two years ago, and a succesful deal would have taken CHS into Michigan for the first time.
Metro Health opted to pursue a deal with Community Health Systems after rejecting proposals from other for-profit and nonprofit health systems, including the University of Michigan Health System and Livonia-based Trinity Health — the parent corporation of Mercy Health Saint Mary’s in Grand Rapids and Mercy Health Muskegon.
Mizuho Securities analyst Sheryl Skolnick is growing comfortable with the idea that outpatient treatments will be a growing source of revenue and profits at LifePoint Health. The Brentwood-based company's execs last week said the trend of rising outpatient surgeries continued this past spring, which led Skolnick to question whether hospital companies' results revolve as strongly around admissions as has long been assumed.
"The answer surprised us, but not enough to abandon the thesis that admits drive performance," Skolnick wrote on Monday, when she reiterated her 'buy' rating but trimmed his price target a bit to $93. Get more of her thoughts here.
LifePoint shares (Ticker: LPNT) are up slightly to $85.21 Wednesday morning. Year to date, they've risen almost 20 percent.
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- TIPTON, JOHN H JR; TIPTON, FRANCES ADAMS
- HARRIS, JUDY C
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- SIMPKINS, W L JR; SIMPKINS, NANCY H