HCA Healthcare Was 'Well Oversold' After Revised Outlook?

 

• RBC Capital Market reduced the target price for HCA Healthcare Inc 
  HCA+2.11%+ Free Alerts
   from $291 to $267 (26.5% upside), noting the shares were well oversold on Friday (-22%) after a ~5.5% guide-down on known labor headwinds. 
• The analysts continue to view the labor backdrop as largely transitory and believe HCA management is well equipped to execute amid near-term uncertainty. 
• "We see ample evidence of irrational selling sector-wide on Friday and remain buyers of our O-rated hospitals (HCA, THC, CYH) on Friday's sell-off," analysts tell investors. 
• RBC Capital notes management's ~5.5% EBITDA guide-down for the year (~2/3 driven by labor and ~1/3 by the lower yield on lower-acuity COVID volume) prompted the broad sell-off.
• Consistent with THC's commentary, agency labor pressure is not stabilizing as quickly as hoped. 
• The most significant unknown for HCA (and peers) is the duration of labor headwinds.
• "We view HCA's 5-6% guide-down as likely prudent amid unprecedented labor costs early in a transition year out of the pandemic and consistent with management's characteristic conservatism," analysts wrote.
• The analysts continue to have high conviction in HCA over the long term and believe that the recent pullback presents an attractive entry point for patient investors.

https://www.benzinga.com/analyst-ratings/analyst-color/22/04/26794245/why-this-analyst-thinks-hca-healthcare-was-well-oversold-after-revised-outlook