Health Management Shares Drop, Downgrade Issued

NEW YORK (AP) — Shares of hospital operator Health Management Associates Inc. fell Wednesday after a Raymond James analyst downgraded the stock citing its sharp run-up and growth concerns.

The stock lost 35 cents, or 4.5 percent, to $7.37 in midday trading. Shares have traded between 79 cents and $8.21 over the last 52 weeks.

Raymond James analyst John W. Ransom cut the stock to "Market Perform" from "Outperform," saying its value has quadrupled since the beginning of the year and has surpassed its prior price target of $7.

"While management's new operational discipline and focus on improved physician relations will likely continue to drive best-in-class volumes and cost containment over the near term, we believe the uncertainty surrounding bad debt expense over the coming quarters and the more difficult cost comps in 2010 will likely limit material near-term upside," Ransom said, in a note to investors.

The analyst said outperformance going forward is likely to be muted as investors turn their attention to 2010, which could be a year of higher bad debt.