Just as the dust is settling on the second-quarter earnings season, John Ransom at Raymond James has raised his rating on shares of Community Health Systems to 'outperform' from 'market perform.' He had gone in the other direction following the Supreme Court's Obamacare ruling in June, but the stock has since retreated near to pre-ruling levels. His new price target for the stock is $70. It was changing hands Friday morning (Ticker: CYH) at about $57.60.
Another analyst has weighed in on the prospects for shares of National Health Investors following word of the pending exit of CEO Justin Hutchens. And just like Juan Sanabria at Bank of America Merrill Lynch, John Kim at BMO Capital Markets says Hutchens' departure is a blow for NHI. He sees "very little managerial depth" at the Murfreesboro-based company and has lowered his rating on the company to 'market perform' from 'outperform.' He also has trimmed his price target more than 10 percent to $65. NHI (Ticker: NHI) is trading at about $58.50.
The lawsuit filed by a Community Health Systems subsidiary against a Georgia hospital has been unsealed, a Columbus television station is reporting.
CHS sued cash-strapped St. Francis Hospital earlier this week for the $5 million it invested in an acquisition deal that later fell through. The Franklin company alleged Columbus-based St. Francis misrepresented itself in the acquisition negotiations. The hospital later signed a letter of intent to sell to CHS' locally based peer LifePoint Health.
The hospital assured CHS that the hospital's problems were exclusively financial, according to the document…CHS says it later learned the hospital was notified the day before their meeting that the Housing and Urban Development Office of Inspector General initiated a legal investigation into the hospital.
Shares of CHS (Ticker: CYH) were $56.91. Year to date, they're up 5.5 percent.
Analyst Paula Torch at Avondale Partners has raised her price target for shares of Acadia Healthcare following the company's second-quarter profit report. The Franklin-based behavioral health care provider is ahead of plan this year in adding beds to its facilities, and new projects will add to the company's ability to grow its top line to $4 billion by 2018. Torch also says margins — especially at the company's United Kingdom and acquired CRC operations — still have upside. That has led her to lift her target for Acadia, which closed Friday (Ticker: ACHC) at $81.78, to $96 from $84. Year to date, they're up more than 30 percent.
Though still highly leveraged, ACHC has consistently demonstrated its ability to generate cash from its current portfolio, and we expect continued solid operating cash flow in 2015 and 2016 to help ACHC execute on deals.
Torch also has taken stock of Community Health Systems' Q2 results and outlook. She's sticking with her 'outperform' rating even though volume and pricing trends "continue to lag peers," mostly due to hospitals previously owned by Health Management Associates. But the factors holding down CHS' valuation — its higher leverage and integration risks, among others — "are starting to mitigate and show signs of improvement," Torch writes. She still sees CHS (Ticker: CYH) climbing to $77 from the $56 and change at which it ended last week.
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.
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