A little good news can have a big effect on ailing hospital stocks. Take Wednesday's healthy jump in HCA ( HCA). The stock rocketed 10% on a hike in fourth-quarter guidance that was due, in no small part, to special items. ( TheStreet.com examined the numbers Thursday.) For one day, at least, HCA proved immune to the worries that typically arise when operational performance -- measured in this case by patient volume -- shows clear signs of weakness. "Others are saying, essentially, that HCA's results aren't as good as they look at first glance and that more bad news is to come," Fulcrum analyst Sheryl Skolnick wrote on Thursday. "Our view is: 1) we agree, there is more bad news to come; and 2) we think that most investors have already figured that out and don't think that it can have more negative impact on the stock price." If anything, Skolnick has found a way to view HCA's shares as cheap even after this week's surge. She notes that the company's valuation, when based on cash flow from operations, has hit a historical low. Pending a detailed review of the company's actual results, however, Skolnick has yet to raise her neutral rating on the stock. Even so, the longtime hospital bear -- among the first to call the industry downturn -- has strongly hinted that an upgrade could be coming. "We felt it best to ... raise the potential that this could be the bottom for the stock in order to appropriately signal what is a significant change in our stance on these shares," Skolnick wrote. "We remain neutral but with much less of a negative bias." For now, the stock is retreating, if mildly. Following Wednesday's big gain, HCA slid back 1.1% to $43.21 a share.
Others sound less enthusiastic. Even UBS analyst Kenneth Weakley -- who already rates HCA a buy -- called the company's fourth-quarter admissions "disappointing." He also questioned whether the company's recent drop in bad-debt expense, which triggered some of the quarter's upside, will prove sustainable going forward.