HCA The Healthcare Company Deutsche Banc Alex. Brown's Scott Estes Initiates Research Coverage
NEW YORK, June 15 /PRNewswire/ -- Deutsche Banc Alex. Brown's Scott Estes today initiated coverage of HCA -- The Health Care Company (NYSE: HCA) (HCA -- $28.44) with a STRONG BUY investment rating on the shares. Formerly Columbia/HCA Healthcare Corp., HCA is the largest owner/operator of acute care hospitals in the United States.
"The recent change in the company's name from Columbia/HCA to HCA -- The Healthcare Company complements many of the restructuring efforts of the past three years," said Estes. "With the majority of divestitures and restructuring process nearly complete, HCA enjoys the premier urban hospital portfolio and a dominant presence in many key metropolitan markets."
Estes points to the following four key investment positives as support for his favorable outlook on the shares of HCA:
1. The recently announced preliminary settlement with the federal
government significantly improves HCA's investment risk profile;
2. The hospital industry is experiencing a vastly improved pricing
environment with roughly 5-6% net price increases from managed care
payors in 2000 and total payments from Medicare set to rise
approximately 1% in 2001;
3. An attractive portfolio of hospitals should generate strong same-store
performance and drive internal growth; and
4. HCA has a solid balance sheet with many metrics transcending the
industry average.
According to Estes, HCA's preliminary settlement with the federal government and leadership position within the industry warrant a premium multiple to its urban peers and a lesser discount relative to the rural hospital group. HCA's current EV/EBITDA (trailing 12-month) multiple of 7.6x is in line with the urban hospital industry average of 7.5x and represents a sharp 29% discount to the rural hospital group average of 10.7x.
Estes arrives at a 12-18 month price target of $40 per share based on a multiple of 8.4x his 2001 EV/EBITDA forecast, or 23x his 2001 EPS forecast of $1.73.
Deutsche Banc Alex. Brown identifies the U.S. investment banking activities of DB Alex. Brown LLC and Deutsche Bank Securities Inc., which are indirect subsidiaries of Deutsche Bank AG. With over $869 billion in assets as of September 30, 1999 and approximately 90,000 employees, Deutsche Bank offers its clients unparalleled financial services throughout the world. It ranks among the leaders in asset management, capital markets, corporate finance, custody, cash management and private banking. Deutsche Bank is divided into five major business units: Global Corporates and Institutions, Global Technology and Services, Asset Management, Corporates and Real Estates and Private and Retail Banking.
HCA -- The Healthcare Company stock is optionable.
Information herein is believed to be reliable and has been obtained from sources believed to be reliable, but its accuracy and completeness cannot be guaranteed. Opinions, estimates, and projections constitute the Company's judgment and are subject to change without notice. This publication is provided to you for information purposes only and is not intended as an offer or solicitation for the sale of any financial instrument. Deutsche Bank Securities Inc., DB Alex. Brown LLC, and their affiliates worldwide, may hold a position or act as market maker in the financial instruments of any issuer discussed herein or act as advisor or lender to such issuer. Transaction should be executed through a Deutsche Bank entity in the client's home jurisdiction unless otherwise permitted by law. Deutsche Bank Securities Inc., and DB Alex. Brown LLC, are members of NYSE and NASD. |
