NEW YORK (AP) -- A UBS analyst started coverage of hospital operators Wednesday, giving top ratings to shares of HCA Holdings and other companies.
Analyst A.J. Rice began covering the sector with "Buy" ratings on HCA Holdings, Community Health Systems Inc., and Health Management Associates Inc. He established "Neutral" ratings on LifePoint Hospitals Inc., Universal Health Services Inc., Tenet Healthcare Corp. and Vanguard Health Systems Inc.
HCA is the largest hospital operator in the U.S. with almost 300 hospitals and surgery centers. Rice said the company has big market share in important, fast-growing metropolitan markets, and he said HCA's management has made a series of smart moves recently. He said those moves included buying back a large number of shares when the company's stock price declined in the fall, and buying out its partner in a Colorado hospital and surgical center joint venture.
Rice said that since the start of 2010, Community Health Systems has acquired, or agreed to acquire, hospitals with a total of $1.5 billion in revenue, and business at its older hospitals is improving. However, he said a federal investigation into its scotched deal for competitor Tenet Healthcare Corp. is still hurting the company's stock.
Community Health made an unsolicited offer to buy Tenet in 2011, and Tenet later accused Community Health of bilking Medicare. Community Health Systems later withdrew its offer and has denied the allegations.
Shares of Community Health Systems shares rose 52 cents, or 2.1 percent, to $24.91 in afternoon trading while Health Management Associates stock added 22 cents, or 3.2 percent, to $7.03. HCA Holdings shares rose 7 cents to $27.22.