This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Health Care Winners and Losers: HealthSouth

Stocks in this article: HLS RHB KND

Shares of rehabilitation program operators HealthSouth (HLS) and RehabCare Group (RHB) rose Wednesday after a Deutsche Bank analyst raised his opinion on the stocks.

RehabCare shares reached an annual high after analyst Pito Chickering upgraded his view of the sector to "Positive" from "Neutral," and upgraded both RehabCare and HealthSouth to "Buy" from "Hold." Chickering said he has become less concerned about the effects of the Obama administration's proposal to "bundle" together Medicare payments for acute and post-acute health care services.

The administration proposed the idea in March as part of an effort to reduce costs and improve coordination of services. The proposal led to concerns that rehabilitation program operators, skilled nursing facility operators and long-term care hospitals would get smaller payments and have to change the way they do business.

Chickering said he now believes the bundling proposal will be "substantially watered down," perhaps becoming a voluntary pilot program for two or three years starting in 2013, including skilled nursing facilities, long-term care hospitals and inpatient rehabilitation facilities.

The analyst said RehabCare and HealthSouth are positioned to gain market share, improve margins and make acquisitions in late 2009. He said the bundling proposal could help the companies if they encourage hospitals to discharge more patients to them.

At the close, shares of St. Louis-based RehabCare rose $1.14 to $24.45, after setting an annual high of $25.48 in the afternoon. Shares of Birmingham, Ala.-based HealthSouth picked up 80 cents to $14.10. Competitor Kindred Healthcare (KND) closed at 13.54, 69 cents higher. Chickering said RehabCare will do well because of its strength in the skilled nursing business, improving results from its long-term care hospitals and potential new acquisitions. He raised his price target on the stock to $28 per share from $19. HealthSouth's second-quarter results could be better than expected due to greater patient admission volumes and stronger profit margins, he said, and management may raise its profit forecast. He said an arbitration between HealthSouth and accounting firm Ernst & Young is approaching completion and could be finished in the fourth quarter.

Chickering raised his price target for HealthSouth to $16 per share from $12.

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,959.44 +154.64 0.87%
S&P 500 2,078.54 +7.89 0.38%
NASDAQ 4,781.4240 +16.0440 0.34%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs