Analyst Paula Torch at Avondale Partners has raised her price target for shares of Acadia Healthcare following the company's second-quarter profit report. The Franklin-based behavioral health care provider is ahead of plan this year in adding beds to its facilities, and new projects will add to the company's ability to grow its top line to $4 billion by 2018. Torch also says margins — especially at the company's United Kingdom and acquired CRC operations — still have upside. That has led her to lift her target for Acadia, which closed Friday (Ticker: ACHC) at $81.78, to $96 from $84. Year to date, they're up more than 30 percent.
Though still highly leveraged, ACHC has consistently demonstrated its ability to generate cash from its current portfolio, and we expect continued solid operating cash flow in 2015 and 2016 to help ACHC execute on deals.
Torch also has taken stock of Community Health Systems' Q2 results and outlook. She's sticking with her 'outperform' rating even though volume and pricing trends "continue to lag peers," mostly due to hospitals previously owned by Health Management Associates. But the factors holding down CHS' valuation — its higher leverage and integration risks, among others — "are starting to mitigate and show signs of improvement," Torch writes. She still sees CHS (Ticker: CYH) climbing to $77 from the $56 and change at which it ended last week.
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.
Paula Torch at Avondale Partners really likes the look of AmSurg following the surgery center and physician services company's second-quarter profit report. The integration of the Sheridan physician services business is running smoothly, she says, while organic growth is topping expectations and the acquisition pipeline is solid. In response, Torch has hiked her price target for AmSurg (Ticker: AMSG) all the way to $90 from $74. After popping this week on the heels of the Q2 report, AmSurg is changing hands Thursday morning at almost $84.
Given the 1H performance and Management's execution thus far, 2015 guidance could still wind up being conservative as we expect strong ASC and PS metrics to continue. Furthermore, we feel more comfortable with AMSG's cross-selling initiatives, which are above internal expectations and its ability to execute on JV partnerships.
RBC Capital Markets analyst Brad Heffern has reiterated his 'outperform' rating on shares of Delek US Holdings in the wake of the company's Q2 earnings report. But he has lifted his price target for the Brentwood-based company to $44 from $42. That leaves more than 25 percent of upside from where Delek (Ticker: DK) is changing hands Thursday morning.
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.
Avondale Partners analyst Paula Torch said she expects AmSurg to report second quarter earnings in-line with expectations with potential for upside. Torch also said adjusted earnings per share could exceed analysts' expectation of 85 cents, which is above the ambulatory surgery center's guidance range of 81 cents to 84 cents.
AmSurg has completed six acquisitions this year. "While we continue to believe the pipeline is robust, we look for more color on the pace and ability to meet or exceed $200 million in capital spend on M&A in 2015," Torch said in a report.
Shares of AmSurg (Ticker: AMSG) were down 1 percent to $68.27. Year to date, they're up almost 25 percent.
Hospital stocks are seeing a lot of action after the Supreme Court ruled Thursday to uphold subsidies for consumers buying health insurance in states using the federal marketplace.
Avondale Partners analyst Paula Torch reiterated her 'market outperform' rating for HCA Holdings and raised the firm's price target to $103 from $90, saying the Supreme Court ruling "clears the runway for the multiple to expand."
Mizuho analyst Sheryl Skolnick has upgraded the stocks of Community Health Systems from 'neutral' to 'buy' and raised her $52 price target all the way to $83.90. On the flip side, CHS was downgraded by Raymond James John Ransom, who dropped the firm's 'outperform' rating to 'market perform.'
Also happening today:
• Leerink analyst Ana Gupta raised her price target for HCA from $95 to $100. She also raised her target for CHS to $70 from $60 and LifePoint Health from $75 to $85.
• Analysts at Oppenheimer raised their price target on HCA to $82 from $60 and CHS to $102 from $87.
• Jefferies analyst Brian Tanquilut raised his price target for HCA to $108 from $95 and CHS to $79 from $75.
Two Avondale Partners managing directors and a senior analyst have left the locally based company for global firm Canaccord Genuity, which also has recruited a former Morgan Joseph vice chairman to set up a first Nashville office.
Making the move to Canaccord are:
• Roger Briggs Jr., who will lead Canaccord's sponsor coverage business nationwide and who was a partner at Trilantic Capital Partners from 2011 to 2013. Before that, Briggs (pictured) led Morgan Joseph's investment banking team for eight years.
• investment banker Dudley Baker, who had been with Avondale since late 2010, when he made the move from Morgan Joseph.
• health care technology and services analyst Richard Close and his right-hand man Brian Hoffman, who had been at Avondale since the springs of 2011 and 2012, respectively. Among the companies they cover is downtown-based HealthStream.
Getahn Ward with The Tennessean writes that the team is hunting for office space in Midtown or The Gulch.
Canaccord, whose shares are listed in Toronto (Ticker: CF) and in London, has a market cap of about $670 million and operations in 10 countries on four continents. The firm earlier this month recruited a team of real estate investment trust analysts in New York and San Francisco.
The move by Baker, Close and Hoffman is a blow for Avondale, whose CEO Pat Shepherd last fall told the Post he was seeking to grow his investment banking team and who early this year added former Stephens managing director Stephen Scott. Avondale's investment banking group, which is led by Jonathan Morphett, now has nine members.
Avondale Partners analyst Paula Torch raised per price target for AAC Holdings to $45 from $41 and maintained the firm's 'market outperform' rating.
Torch said in a report issued Thursday that the company had strong growth and long-term earnings potential, saying the Brentwood company could reach $100 million in adjusted EBITDA by 2017.
"We believe the company is very well-positioned to continue its strong growth trajectory with enough fuel near-term to add more assets to its portfolio," Torch said in the report.
Shares of AAC (Ticker: AAC) were up 6 percent Thursday afternoon to $37.95. Year to date, they're up 22 percent.
Analysts at Leerink Partners and Avondale Partners have raised their price targets for HCA Holdings after the company's first-quarter earnings were in-line and the company announced plans to increase capital spending by $500 million.
Paula Torch at Avondale Partners increased her price target for the company to $90, and maintained her 'market outperform' rating.
"HCA's continued execution, expansion of service lines and access to the patient is driving strong revenue and margin expansion," Torch wrote in a report.
Ana Gupte at Leerink Partners raised her price target for HCA from $80 to $85 and also reiterated an 'outperform' rating.
"Our positive thesis is based on recently observed better than expected core growth and stronger ACA tailwinds of reduced bad debt and increased utilization from access expansion to the uninsured with Medicaid expansion and public exchanges," Gupte said in a report.
Shares of HCA (Ticker: HCA) rose 2.8 percent Thursday to $76.59. Year to date, they're up 4 percent.
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