Deutsche Bank Raises Targets and Estimates on Hospitals and Health Care Facility Stocks (DB, THC, HCA, VHS, CYH, HMA, UHS, LPNT)
Jan 31st 2013 8:31AM
Hospitals and health care facilities to most of us are like the police station. You are glad they are there, but you don't really want to go. When it comes to investing in this sector, one important thing to remember is there is always demand. The need for the products and services provided is not dictated by economics or current trends. Hospital and health care facility stocks may be below the investing radar, but there are some compelling reasons to buy them now.
Deutsche Bank A.G. (NYSE: DB) is convinced that despite the uncertainties that exist heading in to 2014 with the official adoption of the Affordable Care Act, which is better known as Obamacare, the landscape remains constructive for hospital stocks due to the potential for more states' Medicaid expansion announcements and the likelihood for upside revisions to the current Wall St. 2014 estimates.
Deutsche Bank also believes hospitals stocks are still relatively underweighted by many investors and portfolio managers because the peer group is underrepresented, with only Tenet Healthcare Corp. (NYSE: THC) in the S&P 500. HCA Holdings Inc. (NYSE: HCA) potential addition to the index in 2013 could help create additional demand for hospital shares, and broader money flows into the group could help drive further gains, given the lack of current market cap overall.
Deutsche Bank starts one new name at Buy and ups the price target on five additional Buy-rated stocks and one Neutral-rated name. They are:
Vanguard Health Systems Inc. (NYSE: VHS) moves from Neutral to Buy, and the price target is raised from $14 to $17. The Thomson/First Call target is $14.
Community Health Systems Inc. (NYSE: CYH) price target is raised from $37 to $45 with a Buy rating. The consensus Wall St. target is $36.50.
HCA Holdings Inc. is Buy rated and the target is raised from $40 to $44. The Wall St. estimate is at $39.
Health Management Associates Inc. (NYSE: HMA) is Buy-rated and has its price target lifted from $12 to $13. The consensus target is $10.
Tenet Healthcare Corp. (NYSE: THC) is Buy rated and the price target moves from $38 to $43. The Wall St. estimate is at $36.
Universal Health Services Inc. (NYSE: UHS) is rated Buy, with a price target lifted from $54 all the way to $67. The consensus estimate is $57.
Lifepoint Hospital Inc. (NASDAQ: LPNT) is the only stock on the list rated as a Hold. The price target is moved up from $40 to $45. The consensus estimate is $42.
Despite the political tug of war over the future of health care in the United States, the fact remains that regardless of how the medical bill gets paid, it will get paid. It also should be noted that the population is aging, and that should be factored into the overall positive thesis for the hospital and health care facility stocks.
Filed under: 24/7 Wall St. Wire, Analyst Calls, Healthcare Tagged: CYH, DB, HCA, HMA, LPNT, THC, UHS, VHS