Two analysts following hospital industry leader HCA Holdings have hiked their price targets for the company following its Q2 profit report. At Oppenheimer, Michael Wiederhorn now sees HCA — which ended Tuesday trading at $65.07 (Ticker: HCA) — climbing to $74 in the coming quarter. That's up from $62. Ann Hynes at Mizuho has him beat by a dollar after lifting her target to $75 from $60. Both analysts recommend investors add to their HCA holdings.
HCA Holdings released its full financial results for the second quarter Tuesday, reporting earnings in line with the company's preview released last week.
The company reported a net income of $483 million and earnings per share of $1.37, excluding a one-time reimbursement and sale gain, beating analysts' expectations by 10 cents. On a conference call with investors, the company also announced Q2 revenues of $9.23 billion. HCA Holdings cited "continued strong performance in our core business and an increased impact from health reform" for the better-than-expected results.
Overall admissions in the quarter increased 2.3 percent, and revenue per equivalent admission increased 5.4 percent. The company reported decreases in uninsured patients in all markets, particularly in the states that have expanded Medicaid.
"We have seen a 32 percent increase in Medicaid admissions and a corresponding 48 percent decline in uninsured admissions year to date in our four expansion states," said Bill Rutherford, HCA Holdings CFO. "It is interesting to note that uninsured volume for non-expansion states has also declined just under 2 percent."
On the conference call, Rutherford also said the acuity of patients who purchased insurance on the federal and state exchanges was about 10 percent higher than HCA's managed care population. But the acuity and admission increases are expected to taper off as health reform progresses, he added.
President Milton Johnson announced the company has finalized exchange contracts with UnitedHealthcare for all of HCA's Texas markets. The company is also in discussions with "all the major health plans" regarding exchange contracting for 2015, including expansion of exchange networks and new products.
Shares of HCA (Ticker: HCA) are up slightly to $64.38. Year to date, they're up nearly 35 percent.
Jefferies & Co. analyst Brian Tanquilut sees bigger things coming from HCA Holdings' positive earnings preview this week. He thinks that "HCA's strong cash flows open up opportunities for stock-enhancing capital deployment" such as acquisitions or share buybacks. (The company late last year spent $500 million to repurchase some of its stock.) Tanquilut also lifted his price target for HCA to $72 from $70.
Veteran Wells Fargo analyst Gary Lieberman says the guidance raise by HCA Holdings Wednesday looks to be on the conservative side given that the benefits of health care reform aren't going to end anytime soon. He has reiterated his 'outperform' rating on shares of HCA, which jumped 10 percent (Ticker: HCA) to a record high. On the flip side, Paula Torch at Avondale tells Investor's Business Daily that HCA is proving (again) to be best in class.
UBS Securities analyst A.J. Rice says HCA's second-quarter profits won't look great at first blush — comparisons with year-ago numbers will be tough for a number of reasons — but adds that he's heartened by executives' positive tone earlier this quarter. Rice has lifted his price target for the stock of Nashville's largest company (Ticker: HCA) to $67 from $58 and is optimistic hospital operators will say they're benefiting nicely from health insurance reform. HCA shares fell almost 2 percent Tuesday to $54.52 but are up about 15 percent year to date.
There are far fewer reasons to be optimistic for Louisiana-Pacific investors these days, judging by the moves of analysts at Dundee Securities and RBC Capital Markets. At the first firm, Steve Atkinson on Tuesday launched coverage of the construction materials manufacturer with a 'sell' rating and $13 price target, which is 14 percent below where LP shares (Ticker: LPX) began trading yesterday. Atkinson's main reason is a price war that will hurt margins and has him projecting a Q2 loss that stands in sharp contrast to the consensus. At RBC, Paul Quinn has cut his rating to 'sector perform' from 'outperform' and sees LP shares climbing back to only $16 in the coming quarters.
Hospital stocks were trading down Thursday following Wednesday's news that health care spending declined in the first quarter. The overall GDP dropped by 2.9 percent, according to the Bureau of Economic Analysis, and health care spending fell by 1.4 percent.
Shares of Community Health Systems (Ticker: CYH) saw the biggest drop, down about 3.2 percent just before the market closed Thursday. Shares of HCA Holdings (HCA) were down 1.9 percent, while shares of LifePoint Hospitals (LPNT) were down by about 1.3 percent.
Juan Vallarino, HCA senior VP of employer and payer engagement, topped $1 million in stock option profits this month, exercising 15,000 options on both June 5 and June 20. Vallarino sold the resulting shares and booked more than $1.1 million on the moves. Shares of HCA (Ticker: HCA) have climbed 22 percent during the last six months and are up 51 percent over the past year.
Hospital operator HCA has signed a contract to purchase the American General Center in South Davidson County from global insurance company AIG, The Tennessean reports.
A purchase price for the two office buildings, totaling 300,000 square feet, was not released, and HCA says it does not yet have a plan for the property, according to the morning daily.
Shares of HCA (Ticker: HCA), at $57.61 Monday morning, were up 5 percent last week. Year to date, they're up 20 percent.