Moody's Investors Service analyst Dean Diaz has lifted his rating on the debt of HCA Holdings and its affiliates to Ba2 from Ba3. The move lifts HCA's paper to within just a few notches of being labeled medium-grade and not speculative. Diaz noted that HCA's leaders have done a good job positioning the company to benefit from the evolving health care landscape, even if the bad-debt benefits of reform are fading fast.
The rating is also supported by Moody's belief that HCA will remain disciplined with respect to debt financed shareholder initiatives given the company's publicly disclosed leverage and liquidity targets and the continued decline in the ownership and influence of its private equity sponsors. However, Moody's expects that the company will continue to return capital to shareholders through share repurchases in lieu of debt repayment.
The equity research team at RBC Capital Markets says investors should stay in (or get back into) many of the names that were doing well before the market's recent slide. Among these "market darlings," they say, is Nashville-based HCA Holdings, which has fallen 10 percent in the past month — right in line with the S&P 500 Index. HCA (Ticker HCA) fell 1.7 percent Tuesday to $83.09.
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.
TriStar Centennial Medical Center has secured a permit to rehab emergency room space, according to a Metro Codes Department document.
Nashville-based Batten & Shaw is handling the work, with the permit valued at $1.3 million. The permit follows a similar project, valued at more than $4 million, for work on the ER facility at the HCA Holdings flagship facility. Batten & Shaw handled that effort, too.
See the hospital, located at 2400 Patterson St., here courtesy of Google Maps.
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