Lazard Capital Markets (LAZ) Managing Director Picks The Healthcare Sectors That Will Outperform In H2 2012 And Beyond

Wall Street Transcript

67 WALL STREET, New York - August 6, 2012 - The Wall Street Transcript Online has just published its Medical Real Estate Report offering a timely review of the sector to serious investors and industry executives.

Topics covered: REIT Access to Capital - Hospital Consolidation - Affordable Care Act and Reimbursements - Hospitals, Senior Housing, Skilled Nursing and Acute Care

Companies include: HEALTHSOUTH Corp. (HLS), Universal Health Services Inc. (UHS), and many others.

The following excerpt is from an interview in the Medical Real Estate Report:

WST: And the lab companies? What are your ratings on those?

Mr. Gallucci: We have the lab industry as a whole rated "neutral" at this time. Purely from a stock standpoint, our view has been twofold. From a macro perspective, I don't think that they are as defensive as some of the drug channel services companies that we cover. And yet I don't think that they will generate as much upside as hospitals, for example, to the extent the macro environment gets better or the economy gets better.

So from my coverage standpoint, if an investor wants to be more conservatively invested relative to the economy, I'd suggest a pharmacy benefit manager or a drug distributor. If one wants to have more leverage to the economy improving, I'd suggest a hospital company. Neither scenario is where the labs are the best performer. Neither scenario, frankly, is hopefully where the labs are the worst performer, but to me that makes them, to a certain degree, more market performers.

Shifting gears a bit, relative to some of the issues that we think providers face, in general, whether it's the impact of the elections and reform and the long-term outlook for reimbursement given the budget deficits, labs do not have as much exposure here as hospitals. But by the same token, they are also a bit more expensive than hospitals depending on the valuation metric, reinforcing our view that they are market performers at this time.

TWST: What would you say were the highlights from the most recent quarterly earnings, and what will you be looking for or paying attention to most in the next round?

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