BB&T Capital Market analyst Anthony Chukumba has raised his rating on shares of Dollar General to 'buy' from 'hold.' The move came after the stock (Ticker: DG) slid nearly 10 percent in the past month to the low $60s. Chukumba sees it climbing to $78.
Avondale Partners analyst Paula Torch says investors should look at the beaten-up shares of AAC Holdings — they've recovered only slightly from their summer slump — as a chance to buy a company with a clear growth pipeline and the financing to pull it off.
Yes, the legal issues in California that caused the stock to fall in the summer are still there, Torch says, but she has her fingers crossed that there will be clarity in the coming months. In the meantime, the AAC team has access to $100 million in M&A capital, and an organic expansion push should grow to 1,200 the beds in AAC's portfolio next year, with another 150 new beds slated for 2017.
"AAC continues to execute well and fundamentals remain intact with overhangs resulting in a compelling valuation vs. growth. We believe census remains strong, referral sources are healthy, and recent financing provides an extended bridge to execute on its current expansion plans," said Torch, who is sticking by her $32 price target for AAC, shares of which are changing hands this morning at $22.70.
Hospital stocks already had fallen a long way from their spring peaks. On Thursday, they took another tumble after executives with insurance giant UnitedHealth Group said they may not return to the insurance exchange market in 2017. That's a sharp turnabout from last month, when the company said it would add 11 states to its exchange lineup. But now execs say they expect to take a $500 million bath on their insurance exchange business in 2016, and they have scaled back their marketing of those products.
“We cannot sustain these losses,” Chief Executive Officer Stephen Hemsley told analysts on a conference call. “We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.”
The news delivered an early-morning blow to the shares of Middle Tennessee's hospital companies and there was no recovery during the day. Heading into the last few minutes of trading, HCA Holdings was down 6.1 percent while Community Health Systems was off 8.5 percent and LifePoint Health was giving up 5.6 percent. Shares of surgery center and physician services company AmSurg (Ticker: AMSG) also were down more than 5 percent.
Combined, those drops wiped out $2.4 billion of the market value of the four local companies — $1.7 billion of that number in HCA alone. Industry peers Tenet Healthcare and Universal Health Services also didn't avoid the red ink.
The long-suffering shares of Noranda Aluminum Holding are positively cratering today, plunging more than 30 percent to less than 80 cents. The drop, which adds to a slide since the spring from a (reverse-split-adjusted) slide from more than $23, has pulled down the market capitalization of Franklin-based Noranda to less than $10 million.
At this point, it seems only a monumental turnaround will enable the company to meet the New York Stock Exchange's listing requirements. The stock market's regulation team has demanded that Noranda get its shareholders' equity above $50 million and keep its stock price above $1. But a third-quarter write-down of almost $140 million has left Noranda with a massive shareholders' deficit.
From the company's quarterly report filed this week:
In addition, on August 7, 2015, the Company received another notice from NYSE Regulation, Inc. stating that we also were not in compliance with NYSE listing standards because our average market capitalization over a consecutive 30 trading-day period was less than $50 million and, at the same time, stockholders’ equity was less than $50 million. In September 2015, we submitted a plan to the NYSE that articulates steps we plan to take to regain compliance with the listing standard within 18 months following receipt of the notice. The NYSE has accepted our plan of compliance for continued listing on the NYSE. As a result, Noranda’s common stock will continue to be listed on the NYSE, subject to quarterly reviews by the NYSE to monitor the Company’s progress against the plan. If we fail to meet any material aspects of the plan or any quarterly milestones, or if we do not regain compliance within the 18 month period, we will be subject to suspension and delisting procedures. There is no assurance that we will regain compliance with the listing standard.
Scott Mushkin at Wolfe Research his trimmed his rating on shares of Dollar General to 'market perform' from 'outperform.' The move comes after a month in which the leaders of the Goodlettsville-based retailer announced big job cuts at headquarters and in which the stock was pulled down by a sales warning from Walmart. Shares of Dollar General (Ticker: DG) are changing hands this afternoon at $65.87, down almost 2 percent on the day. Year to date, they're down 7 percent.
Shares of Healthcare Realty Trust are down more than 2 percent Friday (Ticker: HR) following a move by analysts at Stifel Nicolaus to downgrade the company to 'hold' from 'buy.' The retreat has taken the stock back to where it was five weeks ago. Year to date, Healthcare Realty is off about 7 percent.
RBC Capital Markets analyst Paul Quinn really likes the look at Louisiana-Pacific shares following the company's third-quarter earnings report. He has boosted his rating on the downtown-based company to 'top pick' status from 'outperform' and lifted his price target to $22 from $20, citing stronger pricing trends for its oriented strand board products and an upswing in its siding business. On Thursday afternoon, LP shares (Ticker: LPX) were trading up about 1 percent to $17.35.
A number of analysts have trimmed their price target for LifePoint Health shares in the wake of that company's Q3 report. BMO Capital Markets has taken its target to $74 from $81 while Leerink Partners has come down to $82 from $87 and RBC Capital Markets now sees the stock climbing to $96 instead of $107. LifePoint shares (Ticker: LPNT) have traded around $70 all week. Year to date, they're off slightly.
Avondale Partners analyst Paula Torch has lowered her price target for Community Health Systems from $60 to $40 based on the Franklin company's weak third quarter. However, Torch is maintaining her 'market outperform' rating for the company and says there is opportunity for CHS to improve during the fourth quarter because of the solid performance expected from its legacy facilities.
"Former HMA facilities continue to create a drag on earnings," Torch wrote in a report this week.
Additionally, Mizuho Securities analyst Sheryl Skolnick has cut her price target for the second time in two weeks, from $34 to $30. In late October, she slashed her target from $77 after CHS issued a profit warning.
Shares of CHS (Ticker: CYH) were up 3.5 percent mid-day Wednesday to $28.34. Year to date, though they're still down 47 percent.
Barrington Research analyst Michael Petusky has trimmed his price target for shares of Healthways to $13 from $18 following the population health services company’s quarterly report and the unveiling of a wide-ranging restructuring plan. Petusky still has Healthways at ‘outperform.’
Over at Barclays, Josh Raskin is still a little more guarded at ‘underweight.’ He also has cut his target for Healthways shares (Ticker: HWAY), which closed Tuesday at $11.48, to $12 from $15.
Paula Torch at Avondale Partners has updated her models for HCA Holdings after the hospital giant formally reported its third-quarter numbers.
Torch is still “confident in management's ability to manage through HR issues which pressured 3Q” and likes that volumes are holding up.
Still, the cost of drugs and people could put pressure on all hospital operators in 2016 and beyond and has Torch “baking in an increased level of conservatism into our numbers.” She has adjusted her 2016 estimates and trimmed her price target to $85 from $103. But she’s reiterating her ‘market outperform’ rating and says investors should look at weakness as a buying opportunity.
At about noon Wednesday, HCA (Ticker: HCA) was changing hands at $68.88, flat on the day.
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