Hospital performance on a YTD basis
After a relatively lackluster performance in 2017, the three major for-profit hospital stocks in the US have seen a rapid rise in their stock prices in 2018. Based on August 21 closing prices, HCA Healthcare (HCA), Tenet Healthcare (THC), and LifePoint Health (LPNT) have reported a rise in stock prices of around 46.9%, 107.6%, and 26.6%, respectively. In 2017, HCA Healthcare, Tenet Healthcare, and LifePoint Health saw returns of around 18%, -1.6%, and -14%, respectively.
As a part of its core strategy, HCA Healthcare is mainly focused on expanding its network of hospitals in those geographical markets that grow faster than the average growth rate in the US. The company currently operates 178 hospitals, 122 ambulatory service centers, 127 urgent care centers, and around 1,200 physician clinics in the US. On the other hand, Tenet Healthcare operates its hospital networks comprising of 62 acute care as well as specialty hospitals, in urban and suburban markets across ten states in the US. At the end of Q1 2018, LifePoint Health had a presence in almost 71 non-urban markets across 22 states in the US. The company, however, canceled its Q2 2018 conference call in the aftermath of the definitive merger agreement between LifePoint Health and RCCH HealthCare Partners.
Analysts’ recommendations for hospital stocks in August 2018
Of the 25 analysts covering HCA Healthcare in August 2018, eight have recommended the company as a “strong buy,” nine have recommended it as a “buy,” six have recommended the company as a “hold,” and two have recommended the company as a “sell.” Wall Street analysts have projected the 12-month consensus target price for HCA Healthcare to be around $132.1, which would be an increase of approximately 0.7% over the company’s closing price on August 22.
Of the 19 analysts covering Tenet Healthcare in August 2018, three have recommended the company as a “strong buy,” two have recommended it as a “buy,” 12 have recommended the company as a “hold,” and two have recommended the company as a “sell.” Wall Street analysts have given the stock a 12-month consensus target price of around $35.3, which would be an increase of approximately 6.6% over the company’s closing price on August 22.
Of the 17 analysts covering LifePoint Health in August 2018, all 17 have recommended the company as a “hold.” Wall Street analysts have projected a 12-month consensus target price for LifePoint Health to be around $61.6.
In the next article, we’ll discuss the revenue estimates for the three hospital stocks for fiscal 2018.