HCA Holdings (HCA) Stock Gaining Following Higher Rating

NEW YORK (TheStreet) -- Shares of HCA Holdings Inc  (HCA) were gaining, higher by 1.51% to $63.39 in mid-morning trading Friday, after analysts at Wells Fargo upgraded the company to "outperform" from "market perform" this morning.

The firm cited improved long-term visibility into financial results following yesterday's Supreme Court decision. 

The stock, along with other health care company stocks, jumped on the Supreme Court ruling that the federal government can continue issuing subsidies to Americans through the Affordable Care Act, also known as "Obamacare."

Eligible American in the 34 states with federal marketplaces, as well as those living in states with their own exchanges, will continue to get federal tax credits.

Wells Fargo analysts expect hospitals to close some of the EBITDA multiple gap, driving multiple expansion.

"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 Janurary 1, 2014," the firm wrote in a note this morning.

Nashville, Tenn.-based HCA Holdings owns, manages or operates hospitals, freestanding surgery centers, diagnostic and imaging centers, radiation and oncology therapy centers, rehabilitation and physical therapy centers and various other facilities.

Separately, TheStreet Ratings team rates HCA HOLDINGS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate HCA HOLDINGS INC (HCA) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 78.94% and other important driving factors, this stock has surged by 49.79% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HCA should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • HCA HOLDINGS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HCA HOLDINGS INC increased its bottom line by earning $4.18 versus $3.36 in the prior year. This year, the market expects an improvement in earnings ($5.24 versus $4.18).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 70.3% when compared to the same quarter one year prior, rising from $347.00 million to $591.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 13.0%. Since the same quarter one year prior, revenues slightly increased by 9.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 129.79% to $1,018.00 million when compared to the same quarter last year. In addition, HCA HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of 1.49%.
  • You can view the full analysis from the report here: HCA Ratings Report

More from Markets

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Jim Cramer: The 10-Year Yield Could Go to 2.75%

Jim Cramer: The 10-Year Yield Could Go to 2.75%

Oil Slumps, Gas Spikes Ahead of Holiday Weekend; Assessing the Chipmakers--ICYMI

Oil Slumps, Gas Spikes Ahead of Holiday Weekend; Assessing the Chipmakers--ICYMI

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%