Analyst: HCA becoming growth stock

Investors digesting reform's impact have pushed stock up 20%+ YTD

One of the analysts following HCA Holdings has lifted his price target by more than 40 percent and says it's becoming clearer that Nashville's largest company is set to grow much more quickly in the coming years thanks to health care reform.

Jake Hindelong at Imperial Capital on Thursday morning reiterated his 'outperform' rating on HCA shares but hiked his target to $48 from $34. That puts him at the front of the pack — according to research firm First Call, the next-highest target is $44 — and leaves HCA more than 30 percent of upside. Those potential gains would be on top of a rise of about 20 percent year to date.

"We believe that the market is beginning to appreciate the multi-year impact that the Affordable Care Act (ACA) will have on earnings growth, and as a result, the market is re-valuing the industry to reflect a growth company multiple," Hindelong said.

Hindelong's comments are similar to those made in recent weeks by some of his peers — among them researchers at Bank of America and JPMorgan Chase — as market watchers and participants get a better grip on just how health reform will play out in the coming years. The increasingly bullishness is centered on the steady addition of millions of new customers who will be brought into the insurance system.

HCA stock (Ticker: HCA) is up more than 4 percent today, lifting its market capitalization to more than $16 billion. Hindelong's call also is lifting other hospital companies, including fellow locals Community Health Systems and Vanguard Health Systems. In the case of CHS, investors also were given a reason to buy by Morgan Stanley analysts, who began covering the company with an 'overweight' rating. On the flip side, Morgan Stanley recommended investors 'equalweight' LifePoint Hospitals, which has lagged HCA and other local hospital chains by 30 percentage points in the past six months.