Taking stock: Good day for a downgrade

Also: Analyst sees more insider buying at Advocat

Shares of LifePoint Hospitals followed the broad market higher today despite a downgrade to ‘underperform’ from a prominent analyst.

Lehman Brothers’ Adam Feinstein wrote this morning that many investors are being too optimistic on LifePoint’s earnings outlook. Citing struggles with physician recruiting and admissions growth, he said the company’s shares (Ticker: LPNT) will fall if it hits its EPS goals but comes up short on admissions.

Apparently, Feinstein is dead on about investors’ optimism: Despite opening down almost 4 percent from yesterday’s close, LifePoint climbed throughout the morning and settled in just below $30, up 3 percent on the day. The move wiped out almost all of yesterday’s losses and leaves the stock level on the year.

Still, other hospital companies – including local rival Community Health Systems – are having better days. At about 1:15 p.m., CHS (Ticker: CYH), which was upgraded by Stifel Nicolaus this morning, was up more than 6 percent and Tenet Healthcare (Ticker: THC) was up more than 8 percent on the back of a Feinstein upgrade.

Avondale: Look for Advocat insider buying

The recent vote by Advocat shareholders to launch a stock purchase plan for the company’s executives will help boost the nursing home operator’s share price over the long term, says Derrick Dagnan, a senior research analyst at Avondale Partners.

The plan allows key personnel at Brentwood-based Advocat to buy up to 150,000 shares at $11.63. Early this afternoon, shares of the company (Ticker: AVCA) were trading at $11.54 on very thin volume. Year to date, they’re up about 6 percent.

Dagnan, who has an ‘outperform’ rating on shares of Advocat, said that he expects Riddle to be “the first of many executives to elect to participate” in the plan, which will help placate restless investors who have been agitating for major changes at the company. Among their demands was higher insider ownership, even though Advocat’s top three execs own 4.7 percent of the company.

The most outspoken investor – California-based Bristol Capital Advisors – this spring pushed for a shareholder vote on selling the company, which was unsuccessful.