Tenet Raised to Outperform - Analyst Blog
January 24 2013 - 1:54PM
Zacks
On Jan 22, 2013, we upgraded Tenet Healthcare
Corporation (THC) to Outperform from Neutral based on
increasing operating revenues and growth through acquisitions.
Moreover, the recent strategic plans of this health care services
company are expected to generate growth, enhance capital structure
and boost shareholder value.
Why the Upgrade?
Tenet Healthcare has been consistently growing its operating
revenues since 2006. Additionally, the company has been steadily
expanding its operating capacity via acquisitions and alliances.
The renewal of the service contract with Cigna
Corp. (CI) in the second half of 2012 is also important
for Tenet Healthcare as it is one of the largest contracts owned by
it.
The Zacks Consensus Estimate for Tenet Healthcare’s
fourth-quarter 2012 revenue stands at $2.52 billion, indicating a
5% improvement over the year-ago quarter.
Moreover, Tenet Healthcare is trying to enhance business growth
and optimize capital structure through financial and strategic
plans comprising acquisitions, share repurchases, debt repayment
and a reverse stock split. While the acquisitions will be directed
toward strengthening the company’s main business lines, the issue
of new debt has already boosted financial flexibility and improved
the debt maturity profile.
Going forward, the planned share buyback will enhance earnings
per share and boost shareholder value. Thus, we believe that the
plan will be beneficial for the company.
We expect Tenet Healthcare to generate a 74.3% improvement in
earnings per share in the fourth quarter of 2012 over the
prior-year quarter. Consequently, the Zacks Consensus Estimate
stands at 70 cents per share. This healthcare service provider,
which carries a Zacks Rank #3 (Hold), is yet to announce the date
for its fourth-quarter earnings release.
Other Stocks to Consider
Other stocks in the medical sector that are currently performing
well include Acadia Healthcare Company, Inc.
(ACHC) – Zacks Rank #1 (Strong Buy) and MEDNAX,
Inc. (MD) – Zacks Rank #2 (Buy).
ACADIA HEALTHCR (ACHC): Free Stock Analysis Report
CIGNA CORP (CI): Free Stock Analysis Report
MEDNAX INC (MD): Free Stock Analysis Report
TENET HEALTH (THC): Free Stock Analysis Report
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