So if you're feeling contrarian, now might be a time to get short hospital companies.
Two more analysts have this week joined the Wall Street chorus saying investors should buy shares of HCA Holdings, Community Health Systems and other players on the expectation that they will be big beneficiaries when millions of consumers come into the health insurance system next year. Justin Lake at JPMorgan on Monday hiked his CHS price target to $52 from $38, citing the reform boost and other operating metrics. Then this morning, BMO Capital's Jennifer Lynch raised her target for CHS to $49 from $35 — lifting its rating to 'market perform' from 'underperform' — for HCA to $42 from $39 and for LifePoint Hospitals to $50 from $41.
There's not much upside from where the stocks are now trading to those targets, but given the near-universal bullishness, don't be surprised if they get bumped up again following Q1 earnings reports. The question is if the stocks — they've all climbed 28 percent or more so far in 2013 — have much more in them.
Analysts at Sidoti have begun covering shares of Brookdale Senior Living with a 'buy' rating and price target of $32. That leaves almost 20 percent of upside for Brentwood-based Brookdale (Ticker: BKD), which is up more than 60 percent in the past six months.
JPMorgan Chase's Michael Mueller is a little more optimistic about Healthcare Realty Trust, along with a number of other REITs. He has upgraded Nashville-based Healthcare Realty to 'overweight' from 'neutral.' His price target for the stock (Ticker: HR), which closed Tuesday at $24.98, is $27 versus his previous $26.
Middle Tennessee's publicly traded hospital companies got a boost Tuesday from analysts at JPMorgan Chase, who began covering them and others in the industry with mostly positive ratings and price targets that leave a lot of upside. The researchers rate HCA Holdings, Community Health Systems and LifePoint Hospitals at 'overweight' and Vanguard Health Systems at 'neutral.' The last of those companies, they said, will not be able to take advantage as much of the benefits of health care reform, while CHS will see its EBITDA grow almost 10 percent because of reform and LifePoint will benefit most.
In terms of price targets and investors' reaction today, here's a rundown:
• HCA: $39 target, changing hands late in the session at $31.67, up 1.5 percent
• CHS: $38 target, trading at about $31.40, up more than 3 percent
• LifePoint: $46 target, trading at $38.50, up more than 4 percent
• Vanguard: $13 target, up almost 3 percent to $11.80.
The private-equity firms accused of collusion and antitrust violations in some of the last decade's biggest mergers and acquisitions are arguing in Boston this week that there was nothing wrong with what they did.
“They neither identify any direct evidence of an actual agreement among these defendants to fix the market for large LBOs nor allege circumstantial facts that support the plausibility of such a conspiracy,” the defendants said in court filings. “These transactions simply represent the normal workings of the mergers-and-acquisition business.”
SEE ALSO: Word back in September of the lawsuit against Bain Capital and other firms
Nashville-based Logan's Roadhouse and banks JPMorgan and Credit Suisse last week amended the terms of the restaurant chain's $30 million debt agreement to give it more breathing room regarding its debt load. Logan's, which had $395 million in long-term debt — more than 1.6 times its equity — as of late April, can now finish its fiscal 2013 with total debt that is six times its adjusted EBITDA. That's up from 5x before.
Similarly, the company's allowed ratio of operating earnings to interest expenses has come down. In return, the amendment to the two-year-old contract limits Logan's annual capital spending to $35 million in fiscal 2013, down from $60 million. That number will stairstep up back to $55 million by fiscal 2016.
The private-equity arm of JPMorgan Chase has wrapped up its $1.1 billion acquisition of clinical documentation services provider M*Modal. The latter will remain based in Cool Springs, and CEO Vern Davenport says his team is ready to grow.
“With all that the dedicated people of M*Modal have accomplished this past year, M*Modal is now uniquely positioned as a critical player in impacting the quality of healthcare and controlling its costs. Together, with our global force of highly skilled clinical transcriptionists and medical coders, our advanced Speech Understanding technology and our comprehensive workflow solutions, our new ownership can now fuel the growth and expansion of this powerful combination of talent and technology.”
M*Modal officials announced Monday today announced that Maryville, Ill.-based Anderson Hospital has selected M*Modal Fluency Direct for use in the hospital and physician offices for speech-enablement of two new, separate electronic health record implementations.
Terms of the deal were not disclosed.
“We are pleased that M*Modal was selected by Anderson Hospital to deliver best-in-class clinical documentation solutions and support with two simultaneous EHR implementations,” Vern Davenport, M*Modal chairman and CEO, said in a release. “M*Modal’s cloud-based technology was developed to meet the needs of hospitals like Anderson that require a quick, seamless changeover, improving the EHR and clinical documentation process for IT and physicians without disrupting patient care.”
Franklin-based M*Modal, a provider of clinical documentation and speech understanding solutions, is in the process of being acquired by the private-equity arm of JPMorgan Chase. Company officials reported last week second-quarter profits are expected to come in at $3 million, down from $5.1 million a year ago.
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