Update (9:37 a.m.): Updated with Tuesday market open information.
NEW YORK (TheStreet) -- Bank of America/Merrill Lynch added Community Health Systems (CYH) to its US 1 List. The firm noted the company is most leveraged to healthcare reform. It holds a "buy" rating and a $63 price target on the stock.
The stock was up 1.86% at $37.75 at 9:36 a.m. on Tuesday.
Separately, TheStreet Ratings team rates COMMUNITY HEALTH SYSTEMS INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate COMMUNITY HEALTH SYSTEMS INC (CYH) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 16.7%. Since the same quarter one year prior, revenues rose by 28.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $65.00 million or 13.72% when compared to the same quarter last year. Despite an increase in cash flow, COMMUNITY HEALTH SYSTEMS INC's cash flow growth rate is still lower than the industry average growth rate of 37.35%.
- COMMUNITY HEALTH SYSTEMS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, COMMUNITY HEALTH SYSTEMS INC reported lower earnings of $1.54 versus $2.96 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus $1.54).
- The gross profit margin for COMMUNITY HEALTH SYSTEMS INC is currently extremely low, coming in at 14.49%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.66% trails that of the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Providers & Services industry. The net income has significantly decreased by 241.8% when compared to the same quarter one year ago, falling from $79.00 million to -$112.00 million.
- You can view the full analysis from the report here: CYH Ratings Report