This Day On The Street
Continue to site
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

Health Care Winners and Losers: HealthSouth

Shares of rehabilitation program operators HealthSouth (HLS - Get Report) 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 - Get Report) 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.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
HLS $31.02 -1.60%
KND $8.52 -1.90%
AAPL $93.90 0.21%
FB $102.00 0.08%
GOOG $682.63 -0.07%


Chart of I:DJI
DOW 15,954.93 +294.75 1.88%
S&P 500 1,860.28 +31.20 1.71%
NASDAQ 4,327.2480 +60.4110 1.42%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs