Community Health Systems (CYH) Stock Downgraded at RBC
NEW YORK (TheStreet) -- Community Health Systems (CYH) - Get Report stock was downgraded to "sector perform" from "outperform" at RBC Capital Markets this morning.
The firm cut its price target to $15 from $18 on the stock.
Community Health Systems's management announced updated guidance on Monday that suggests improving performance, but the turnaround at Health Management Associates, which Community Health Systems acquired in 2014, will likely take longer than management expects, RBC wrote in note.
"While we are encouraged by efforts to strategically reposition the portfolio and deleverage the balance sheet, the long-awaited turnaround at HMA has not panned out, as operational traction seen from CYH's historically successful playbook has simply not worked or will take longer to work," the firm explained.
Certain improvement initiatives, such as completion of managed care contracting updates and recently closed accretive acquisitions, will likely be able to impact guidance in the near-term, while savings from several cost initiatives will occur later in the year, RBC added. There is consequently "little opportunity" for multiple expansion.
After Monday's market close, the hospital operator reported adjusted earnings of 27 cents per share on revenue of $5 billion, missing analysts' estimates for earnings of 74 cents per share on revenue of $5.01 billion.
Separately, TheStreet Ratings team rates the stock as a "sell" with a ratings socre of D+.
Community Health System's weaknesses include its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and generally high debt management risk.
You can view the full analysis from the report here: CYH
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.
