UBS analyst Andrew Mok has initiated coverage on HCA Healthcare (NYSE:HCA) with a Buy rating and price target (PT) of $312.
HCA is in a positive earnings revision cycle with strong demand, market share gains and free cash flow likely to drive EBITDA above consensus 2022 estimates, believes analyst.
In addition, analyst Andrew Mok has initiated coverage of several other healthcare service providers.
Acadia Healthcare(NASDAQ:ACHC) drew new Buy rating and PT of $81. The analyst has conviction in the company's ability to achieve 10% EBITDA growth target through 2025, driven by organic volume growth and $150M of balanced EBITDA contribution from growth initiatives.
Encompass Health(NYSE:EHC) is also initiated at UBS with a Buy rating and PT of $98. The analyst says Encompass represents one of the most compelling investments in his coverage with a "clear catalyst for value creation" when the company separates its home health and hospice business from its inpatient rehab business.
LHC Group(NASDAQ:LHCG) has drawn a Neutral rating with PT of $170. The analyst states that while the Street is overlooking 2022 earnings contribution from accelerating acquisitions, given the structural headwinds in the hospice industry, a multiple expansion is "difficult to see".
Amedisys(NASDAQ:AMED) is initiated with a Sell rating and $150 PT. Mok expects negative revisions to Street estimates heading into 2022 and warns that the hospice segment carries elevated risk and uncertainty over the near-term due to COVID.
Universal Health Services(NYSE:UHS) made a debut with a Sell rating and $136 PT. Analyst's negative view is driven by limited organic EBITDA growth, adding that his 2022 and 2023 EBITDA forecasts that are 4% and 5% below Street estimates due "structural differences" in behavioral demand relative to ACHC and no meaningful positive growth catalysts.
Tenet Healthcare(NYSE:THC) also made a debut at UBS with Neutral rating and $83 PT. The stock's valuation is being anchored by hospital business multiple, says analyst.
Mok also adds that Tenet's target to reach 50% ambulatory EBITDA by 2023 requires significant M&A, though the expected Conifer spin "could change that".
UBS also initiated coverage of Community Health Systems(NYSE:CYH) with a Neutral rating and PT of $12.50. The company has done a "nice job" re-positioning its hospital portfolio and improved its EBITDA margins over the last three years, says analyst.
Below is the comparison of Total Return performance of HCA with its peers.