So it appears there's a good chance the upheaval last week around Health Management Associates has legs. Helping sustain the chatter Friday was Susquehanna Financial analyst Chris Rigg. He unsurprisingly didn't get much in the way of specific M&A commentary out of Community Health Systems executives, but he did put a number on what HMA might end up fetching if it does land on the sale block. That number is $18.50 — more than 30 percent above Friday's closing price — and at that price, Rigg says, a $4.8 billion all-cash buyout would add 60 cents to CHS' profits per share.
The board of hospital chain Health Management Associates this weekend voted to adopt a poison pill after hedge fund group Glenview Capital Management said early this month it had filed papers to raise its 14.6 percent in the company.
Glenview, which is run by Larry Robbins and which owns 9 percent of Community Health Systems and almost 7 percent of LifePoint Hospitals, moved quickly this morning to try to settle the dust by saying it has no plans to seek control of HMA.
It now remains to be seen whether Robbins has some grander strategic plans for his hospital holdings. Glenview began piling money into hospital stocks a year ago betting that health care reform will be a long-term boon to the sector.
Shareholders of Community Health Systems last week approved the company's executive compensation and stock option plans. The comfortable decision — both measures received at least 82 percent of the vote cast — was a sharp contrast to that of a year ago, when investors said they did not approve of the hospital company's pay philosophy. CHS' board last summer instituted some big changes as a result.
Wayne Smith, chairman, president and CEO of Community Health Systems, says his team's fledgling collaboration with The Cleveland Clinic appears to be giving it a boost in the merger market. Speaking to Reuters as part of a story on the rising importance of academic partnerships — Williamson County neighbor LifePoint Hospitals is building a solid track record with its Duke LifePoint joint venture — Smith said CHS has been approached by a number of on-the-block hospitals since announcing the Cleveland Clinic partnership two months ago.
Avondale Partners analyst Kevin Campbell says it's looking more and more like the volume weakness experienced by many hospital chains in the first quarter was more seasonal than structural. April's traffic was better, he says, and shares of locals HCA, CHS, LifePoint and Vanguard should continue to trend higher as investors remain focused on the expected benefits of health reform next year and beyond. Other factors helping: Pricing for the insurance exchanges being set up looks to be solid, and Medicare disproportionate-share payment cuts won't be as bad as expected.
Shares of HCA (Ticker: HCA) are starting the week on a sour note — down 3 percent at 11:30 a.m. — while the stocks of CHS, LifePoint and Vanguard all are up slightly.
David Strasser has joined the Tractor Supply bulls in a big way. The Janney Montgomery Scott analyst on Thursday hiked his rating on the farm and ranch retailer to 'buy' from 'neutral' and taken his price target from $97 all the way to $125. That's the highest number on the Street. Shares of Tractor Supply (Ticker: TSCO) ended Thursday trading a little above $108.
Ann Hynes at Mizuho Securities has reiterated her 'neutral' rating on shares of Community Health Systems following the company's first-quarter profit report. But like a number of her peers, she has also raised her price target on CHS and now sees the stock climbing to $48 instead of $41. CHS (Ticker: CYH) closed at $46.05 on Thursday.
Two more analysts following Community Health Systems have reiterated their 'hold' ratings on the company's shares after its first-quarter earnings report. But Joe France at Cantor Fitzgerald has lifted his target to $42 from $35 and Barclays Capital's Josh Raskin now sees the stock climbing to $50 rather than $48. CHS (Ticker: CYH) ended Wednesday trading at $44.72.
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