Story updated at 10 a.m. to reflect market activity.
Shares of Tenet Healthcare fell 0.9% to $62.30 in morning trading.
The analyst firm set a price target of $65 for the hospital operator. Leerink expects Tenet Healthcare to report earnings of $1.42 a share in 2014, above consensus estimates of $1.38 a share. For 2015 the analyst firm estimates earnings of $2.80 a share, above the consensus of $2.77 a share.
"We see the tailwinds of the ACA as getting increasingly priced in though near-term positive revisions should continue through 2015," Leerink analyst Ana Gupta wrote.
Separately, TheStreet Ratings team rates TENET HEALTHCARE CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate TENET HEALTHCARE CORP (THC) 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 robust revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- THC's very impressive revenue growth greatly exceeded the industry average of 20.7%. Since the same quarter one year prior, revenues leaped by 66.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 78.84% and other important driving factors, this stock has surged by 44.74% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- TENET HEALTHCARE CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TENET HEALTHCARE CORP swung to a loss, reporting -$1.20 versus $1.72 in the prior year. This year, the market expects an improvement in earnings ($1.35 versus -$1.20).
- The gross profit margin for TENET HEALTHCARE CORP is currently extremely low, coming in at 11.38%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.64% trails that of the industry average.
- The debt-to-equity ratio is very high at 15.99 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, THC maintains a poor quick ratio of 0.77, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: THC Ratings Report
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