NEW YORK (TheStreet) -- Tenet Healthcare (THC) stock is up by 1.25% to $56.90 in pre-market trading on Friday morning, after the healthcare services company was upgraded to "outperform" from "market perform" at Wells Fargo.
The firm said it upped its rating on Tenet Healthcare following yesterday's court decision regarding the Affordable Care Act.
Wells Fargo believes the court decision will allow less volatile and accelerated EBITDA growth to continue, driving multiple expansion.
"This is likely the final challenge to the Affordable Care Act (ACA) that will be heard by the Supreme Court (SCOTUS). We believe that shares of hospital stocks are likely to close some of the EBITDA multiple gap, which exists between them and the broader market. Our forecast for multiple expansion reflects the improved longterm visibility into financial results due to a continuing rise in the number of individuals with health insurance in the United States that began on 1/1/14," Wells Fargo said in an analyst note.
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 impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and poor profit margins."