HMA Takes a Hammering

Investors have finally lost their patience and pulled the plug on Health Management Associates (HMA).

With their hopes for a long-awaited recovery dashed by a miserable second-quarter update, HMA investors on Tuesday dumped their stock -- sending it to lows unseen since 1999 -- in an effort to escape further pain. Wall Street experts, who once adored HMA's stock, started issuing downgrades that helped usher investors out the door.

CRT Capital Group analyst Sheryl Skolnick, already an outspoken critic of HMA, quickly cut her rating on the company's stock from fair value to sell despite its 20% plunge on Tuesday.

Following a huge bad-debt charge and reduction in full-year guidance, "HMA is finally coming in line with both the reality of its business and with its peers," Skolnick wrote. "It is ironic, therefore, that we are lowering our rating ... at this time. But it is, in our view, completely necessary."

Notably, Skolnick insisted, HMA continues to trade at "an astounding premium" that does not properly reflect the company's deteriorating operational performance.

Meanwhile, Deutsche Bank analyst Darren Lehrich stepped forward with a downgrade of his own. After raising his recommendation on HMA to buy just five months ago -- when he sensed chances for a turnaround -- Lehrich cut his rating back to hold and portrayed margin improvement at the company as "elusive."