THC...just FYI
Despite the headline for this article, there are a few positive comments mentioned.
DJ Some On St Remain Leery Of Tenet Despite Mgt's Assurances
By Johanna Bennett and Christine Richard Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Despite Tenet Healthcare Corp.'s (THC) strenuous efforts to reassure Wall Street, attitudes toward the beleaguered hospital chain remain mixed after the company slashed its earnings outlook and unveiled a more conservative pricing strategy.
Executives from the nation's second-largest hospital chain touted the company's long-term prospects during a conference call with analysts and investors Tuesday. And shares were up in morning market action.
Still, in some quarters, concerns about Tenet remain strong, especially given the company's reliance on controversial Medicare payments for its impressive bottom-line growth these past two years. Several stock analysts reiterated cautious investment ratings and warned clients that Tenet's share price will remain volatile for the near future. And some fixed-income analysts voiced worries about the company's projections.
"We're afraid charts and graphs and extrapolated historical trends might not be sufficient to model this company's future," wrote Carol Levenson, director of credit research at independent research firm GimmeCredit.
But other Wall Street pundits see Tenet as good buy for investors with a long-term outlook.
"For people with a multiyear time horizon, it is a pretty good buy," said Erick Lucera, senior vice-president of Independence Investments LLC in Boston. "But you will have your ups and downs."
Merrill Lynch analyst A.J. Rice reiterated a buy rating on shares of Tenet and predicted the stock price could jump as much as 70% in the next year to $30 a share.
"We recognize that Tenet's shares are not for everyone and carry our highest corporate risk rating. Nevertheless, the risk reward, we believe is attractive," said Rice, who does not own shares of the stock.
Shares of Tenet were trading recently at $18.95, up $1.10, or 6.2% on volume of 11.6 million shares. Average daily volume is about 11.06 million shares.
Tenet's stock price has fallen to its lowest levels in more than two years amid a firestorm of controversy over an aggressive pricing strategy that opened the door for the company to collect a large share of Medicare reimbursements for expensive medical treatments.
Known as outlier payments, these fees are paid to hospitals to cover the cost of cases that are extremely expensive. They are based on retail charges, which Tenet has been rapidly increasing since 1999 as part of an effort to bolster declining profits.
(MORE) DOW JONES NEWS 12-04-02
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