Two more analysts tracking Community Health Systems have formally reacted to the company's profit warning last week. Most notably, Ana Gupte at Leerink Partners has slashed her price target for the hospital owner to $33, less than half the $75 she had expected CHS to reach in the coming year. She now rates CHS at 'market perform' instead of 'outperform' and says, among other things, that there is little sign medical cost trends will reverse themselves soon.
Over at Robert W. Baird, veteran analyst Whit Mayo has lowered his CHS rating from 'outperform' to 'neutral.' Mayo's new target for the Franklin-based company is $32, which is 15 percent above where the stock (Ticker: CYH) was changing hands in early Tuesday trading.
Robert W. Baird analyst Whit Mayo upgraded his AmSurg rating Friday to 'outperform' from 'neutral.' Mayo also boosted his price target for the company to $55 from $44.
Shares of the ambulatory surgery company (Ticker: AMSG) were down nearly 10 percent last week, following news that the company is offering almost 10 million shares to finance its acquisition of Sheridan Healthcare. Year to date, shares are down slightly. However, they're up 28 percent in the last 12 months.
While panelists at Wednesday's Nashville Health Care Council Wall Street analysis event had plenty to agree on — the need for Medicaid expansion, the likelihood of further hospital and managed care consolidation and the very low chance of an ACA repeal — one topic had the panel divided.
Led by Community Health Systems Chairman, President and CEO Wayne Smith, the discussion ranged from perception to prediction, but the panel of analysts were not in consensus about a long-term "doc fix," a way to better control what physicians are paid by Medicare. While Congress has continued to kick the can in regards to replacing the Sustainable Growth Rate adopted in the late 1990s, each short-term postponement of physician pay cuts has heightened the financial need for a long-term solution. (Click here for some good background from The Washington Post.)
While local analysts Whit Mayo of Robert W. Baird and Frank Morgan of RBC Capital Markets told the event's audience that a permanent solution was likely — Morgan said that, if anything actually gets done in D.C. on this issue this year, it will be a long-term plan — Credit Suisse's Ralph Giacobbe and Bank of America Merrill Lynch's Kevin Fischbeck disagreed.
Fischbeck predicted only a 20 percent likelihood of a long-term fix, because it is politically easy to continually pass the small bills and Giacobbe said political gridlock will continue to be too strong to allow for a real solution.
Locally based Robert W. Baird analyst Whit Mayo says HCA Holdings (Ticker: HCA) is still one of the top picks in the hospital space. Noting the company's "stable end-market demand, forthcoming capital deployment opportunities, and accelerating growth," he has reiterated his 'outperform' rating and $57 price target.
Sean Steuart at TD Securities has lifted his rating on shares of Louisiana-Pacific to 'hold' from 'reduce' following the company's Q3 profit report. The main reason, he says, is that LP's shares (Ticker: LPX) have fallen to the point that they are in line with those of their peers.
Nashville-based Robert W. Baird analyst Whit Mayo has joined a number of his peers in recommending investors accumulate shares of HCA Holdings in the coming quarters. And like a number of other analysts recently, Mayo points to the industry leader's better-than-the-rest volume growth. Shares of HCA (Ticker: HCA) are up more than 15 percent in the past month and 54 percent year to date, lifting the company's market cap well north of $20 billion.
Mark Weintraub at Buckingham Research has raised his rating on shares of Louisiana-Pacific to 'buy' from 'neutral.' The move, which comes after LP (Ticker: LPX) lost almost 30 percent of its value since late March, is a two-pronged call. Weintraub says the company's valuation at $15 and change is now attractive again and that similar price drops in its core oriented strand board product may be running out. He has lifted his price target for LP to $21 from $19.
Over at the West End offices of Robert W. Baird, Whit Mayo this morning said Acadia Healthcare remains one of his top picks and advised investors to jump in following the stock's pullback from $35 to about $32. Investors dutifully listened and have pushed up Acadia shares (Ticker: ACHC) more than 3 percent to well above $33.
Analyst Brian Tanquilut at Jefferies has become the latest follower of Nashville's big hospital operators to announce a major price target hike. Tanquilut on Monday reiterated his 'buy' rating on HCA Holdings and told clients he sees the shares going to $45 in the coming year, up from $30. Like many of his peers, he sees positives in the many previously uninsured patients expected to make their way into the system. HCA stock (Ticker: HCA) closed down 1.6 percent Monday but is still up 25 percent so far this year.
Tanquilut said in his note that about 8 percent of the patients HCA admits are uninsured. But he cautioned that the amount of help the overhaul provides will depend on variables like the number of states that expand Medicaid coverage and the number of uninsured people who buy coverage.
Veteran local researcher Whit Mayo says Acadia Healthcare is still one of his favorite plays in the health care arena given its potent combinations of big earnings growth, money in the bank and "benign regulatory risks." The Robert W. Baird analyst has tweaked his price target for Franklin-based Acadia to $32 from $31. The stock (Ticker: ACHC) closed Monday trading around $25.50.
Locally based hospital analyst Whit Mayo dented stocks in the sector Monday with a note that said the federal budget negotiations now (kinda) underway in D.C. will cut into health care spending. Mayo said his Robert W. Baird team also thinks the potential delays in setting up health insurance exchanges also won't help hospital stocks.
Here are the particulars on the local companies: Mayo downgraded Community Health Systems and Vanguard Health Systems to 'neutral' from 'outperform.' CHS' price target also was cut to $31 from $33. Mayo also lowered the price target on HCA Holdings to $35 from $37, but kept his 'outperform' rating. All three names were down 1.6 percent or more, with CHS taking the worst of it.
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