Citi analysts have launched coverage of various segments of the health care sector, including hospitals. They're not all that upbeat about the hospital space, giving most players a 'hold' rating. Only LifePoint Health merits a 'buy' in their opinion; they see its shares (Ticker: LPNT) climbing to $82 from about $71 today. Overall, the analysts say they are "more tempered" on the hospital industry because of doubts about the continued growth in volumes amid difficult comparisons as well as "unease around potential bad debt creep."
Locally based Avondale Partners analyst Paula Torch has been bullish on LifePoint for a while. In a note Friday, she reiterated her 'outperform' rating and $94 target and says a big part of the company's appeal is its success buying and integrating smaller players.
If the remaining $600M in announced acquisitions closes by the end of 2015, LPNT will have added ~$1.85B in revenue over two years. Given the size, quality, and improved infrastructure, we believe the class of '14 and '15 deals could add over $200M in EBITDA by 2018.
Mizuho Securities analyst Sheryl Skolnick is growing comfortable with the idea that outpatient treatments will be a growing source of revenue and profits at LifePoint Health. The Brentwood-based company's execs last week said the trend of rising outpatient surgeries continued this past spring, which led Skolnick to question whether hospital companies' results revolve as strongly around admissions as has long been assumed.
"The answer surprised us, but not enough to abandon the thesis that admits drive performance," Skolnick wrote on Monday, when she reiterated her 'buy' rating but trimmed his price target a bit to $93. Get more of her thoughts here.
LifePoint shares (Ticker: LPNT) are up slightly to $85.21 Wednesday morning. Year to date, they've risen almost 20 percent.
Avondale Partners analyst Paula Torch says investors should expect generally good second-quarter numbers from hospital operators in the coming weeks. The recent positive preview from industry leader HCA Holdings was a good tell and should generally translate to other operators. Torch expects LifePoint report earnings per share of $1.01, two cents above analysts’ consensus, on the back of good patient volumes, better cost controls and the upgrading of acquired hospitals. But she’s not as bullish on the prospects of Community Health Systems, which she expects will earn 88 cents per share, a penny less than consensus. But revenues should be strong, she says, helped by easier comparisons to last year’s Q2 and helping to offset spending on doctor recruitment at former HMA hospitals.
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