Bank of America Merrill Lynch analyst Kevin Fischbeck named HCA Holdings and Community Health Systems as his top picks Tuesday, saying improved profits were a likely result of the Affordable Care Act.
Fischbeck raised his price target for HCA by $3 to $65 and maintained his CHS target of $63, and also singled out LifePoint Hospitals. Citing fewer bad debts and charity cases in the first quarter through Medicaid expansion, Fischbeck said reform benefits were clear. As coverage ramps up in the second quarter, hospitals should continue to benefit.
"Once people get insurance, there is an immediate change in how payments flow through the system," he said.
Hospital stocks are finishing the week on a high note thanks to Medicaid expansion chatter in Virginia and Pennsylvania, says UBS analyst A.J. Rice. The firm says Community Health Systems has more than 11 percent exposure in Pennsylvania and LifePoint Hospitals gets nearly 13 percent of its revenues in Virginia.
Virginia Gov. Terry McAuliffe has made clear that expanding Medicaid is a top priority, but state Republicans are pushing back, MSNBC reports.
The governor insists he won't approve a budget without Medicaid expansion; Republicans insist they won't approve a budget with Medicaid expansion. It's pushed McAuliffe to try to get creative, though the details of his plan remain elusive.
Pennsylvania's shot at expansion seems a bit more likely, with three Republican House members joining with Democrats this week to vote in favor of expanding Medicaid. However, Gov. Tom Corbett does not support expansion, the Pittsburgh Post-Gazette reports, and has submitted a "Healthy PA" plan to the federal government in its stead.
Shares of CHS (Ticker: CYH) are up 8 percent this week to $45.12. Shares of LifePoint (Ticker: LPNT) are up 5 percent this week to $64.16.
Color John Ransom enthusiastic about AmSurg's game-changing play for Sheridan Healthcare. The veteran Raymond James analyst has upgraded shares of the ambulatory surgery company all the way to 'strong buy' from 'market perform' and sees the stock (Ticker: AMSG) rising to $60 from the $45.74 where it closed Thursday. Ransom also has raised his 2015 EPS estimate for AmSurg to $3.15 from $2.77.
Shares of LifePoint Hospitals hit an all-time high of $63.07 Friday morning thanks in part to an upgrade from Ann Hynes at Mizuho. Hynes now rates the hospital operator a 'buy' instead of a 'neutral' and has raised her target to $72 from $58. LifePoint shares (Ticker: LPNT) are up almost 2 percent to $61.99 in late-morning trading.
Even among the laundry list of Middle Tennessee executives 2014 insider trades, this one is a biggie.
Bill Carpenter, chairman and CEO of LifePoint Hospitals, last week slashed his stake in the company by almost 30 percent while exercising a boatload of stock options that would have expired next year and in 2016. In all, Carpenter exercised 125,000 options before selling the resulting shares as well as almost 156,000 others. His total profit on those transactions was more than $11.6 million.
Carpenter, who took the helm at Brentwood-based LifePoint in mid-2006, still owns more than $21 million worth of LifePoint stock, which has climbed (Ticker: LPNT) 8 percent this year.
SEE ALSO: Details of other LifePoint insiders' recent sales
Paul Gilbert, the chief legal officer at LifePoint Hospitals since early 2008, this week became the latest local insider to book some big profits when he exercised 40,000 stock options and then sold more than 54,000 of his shares. The moves — which came after LifePoint (Ticker: LPNT) climbed more than 10 percent in a month — produced a profit of almost $1.7 million for Gilbert, who moved to LifePoint from Waller in 2006.