Health Care Winners & Losers: Lifepoint

NEW YORK -- Shares of Hospital operators slipped with the market Monday, and as a Goldman Sachs analyst said, the companies are not as protected against an economic downturn as they have been in the past.

Matthew Borsch kept a "Neutral" rating on the sector. He said the companies are deeply in debt, and they are carrying larger amounts of bad debt, or debt from treating patients who have no insurance or are underinsured. As a result, they are not as defensive as they once were in an economic downturn.

Negative economic news sent major indices significantly lower in Monday trading, and that included most hospital stocks.

However, the analyst said shares of Community Health Systems (CYH Quote) and LifePoint Hospitals (LPNT Quote) are safer than their peers, and could gain ground. He said the gradual implementation of U.S. health care reform could help hospital stocks because it may partially cancel out economic difficulties.

With the stocks slumping, Borsch made sharp cuts to his price targets across the sector. He cut his target on Community Health to $14 from $32.50, and the stock lost 86 cents, or 6.5%, to $12.20 in afternoon trading.

LifePoint shares dropped $2.21, or 11%, to $17.85.

Health Management Associates (HMA Quote) closed down 27 cents, or 18.5%, to $1.19, and Universal Health Services (UHS Quote) declined $3.19, or 8.6%, to $33.96.

Shares of MedCath (MDTH Quote) were in positive territory, rising 8 cents, or 1%, to $7.46.

In the same note, Borsch singled out two stocks to avoid: ambulance services provider Emergency Medical Services (EMS Quote) and medical laboratory and research products company Quest Diagnostics (DGX Quote).

EMS stock fell 96 cents, or 2.8%, to $32.96, and Quest shares fell $3.26, or 7%, to $43.31.