HCA Healthcare, Universal Health, Tenet, Community Health initiated at Barclays

Barclays starts Hospital sector with Neutral outlook, top pick HCA. Barclays analyst Steve Valiquette initiated coverage of the Hospital sector with a Neutral rating. Operators continue to face incremental pressures from alternative payment models that are shifting incentives towards lower-cost sites of care, Valiquette tells investors in a research note. He believes, however, that despite industry headwinds, operators levered to markets with high population growth and high relative market share will continue to outperform the industry. The analyst’s only Overweight rated name in space is HCA Healthcare (HCA). The analyst initiated coverage of HCA with an Overweight rating and $150 price target. He sees HCA as well positioned in local markets. Valiquette also started Universal Health Services (UHS) and Tenet Healthcare (THC) with Equal Weight ratings. His lone Underweight rating is put on Community Health Systems (CYH). The company is still burdened with excessive debt and constrained free cash flow from its rural hospital footprint, Valiquette contends.

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