Tenet Converts a Tough Critic

Tenet Healthcare(THC Quote - Cramer on THC - Stock Picks) has passed a major test.

The challenged hospital company has finally convinced a prominent company bear that it's truly on the mend. Early Friday, Credit Suisse analyst Kenneth Weakley -- one of the most celebrated healthcare experts on Wall Street -- started recommending Tenet's stock in anticipation of a long-awaited recovery.

Investors eagerly responded, sending shares of Tenet up 15% to $6.25 in heavy trading. The same stock fetched less than half that price just six months ago.

"I think the evidence (of a turnaround) has been there," says CRT Capital analyst Sheryl Skolnick, who has been bullish on Tenet for some time. "It's just a question of when people reach their comfort point. (But) clearly, Tenet is Wall Street's darling today."

Tenet used to be Wall Street's darling years ago as well. But in late 2002, Weakley exposed an aggressive pricing scheme that triggered the company's collapse. He remained bearish on the company for years, as it struggled to recover in a brutal industry environment defined by weak patient admissions and rising bad debts from the uninsured.

Finally, last August, Weakley predicted -- for the first time ever -- that Tenet would wind up bankrupt in the end.

"Since then, Tenet has had two consecutive earnings quarters (Q3'07 and Q4'07) of positive direction -- with Q4'07 showing the first signs of positive volume growth in years," Tenet touted in an email to TheStreet.com on Friday. Now "the market will be closely watching Tenet's Q1'08 earnings report coming up May 6 to see if the third time's a charm and Tenet's recovery is well under way."

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