Leerink Partners Bullish Towards HCA Holdings (HCA) After 1Q; PT to $85

Leerink Partners reiterate an Outperform rating on HCA Holdings, Inc. (NYSE: HCA) and raise the price target to $85 (from $80) after HCA's 1Q report was in-line with their pre-announcement from April 15. The announced adjusted EDITA figure was $1,960MM, and their reported figure was $1,961MM (~$85MM better than consensus).

Leerink analyst, Ana Gupte, released a thesis saying, "Our positive thesis is based on recently observed better than expected core growth and stronger ACA tailwinds of reduced bad debt and increased utilization from access expansion to the uninsured with Medicaid expansion and Public Exchanges. Post solid beat and raise 1Q15, we raise our estimates for 2015E and 2016E EBITDA to $7,735MM (from $7,648MM) and $8,227MM (from $8,158MM) are above consensus of $7,730MM and $8,181MM, respectively. In the medium term, we see HCA as well positioned among its peer group to offset the back-loaded reimbursement headwinds from ACA through scale and fixed cost leverage. We also expect accretive horizontal and vertical consolidation into high growth adjacencies with the solid Balance Sheet and leverage ratio of 3.7x, as well as strong organic free cash flow. Valuation is at EV/EBITDA of 8.1x of consensus 2015E EBITDA, is in-line with peer mean, but can expand further on future beats and positive revisions. Our revised price target of $85. contemplates an EV/EBITDA of 8.4x on the average of our 2015E and 2016E EBITDA views."

For an analyst ratings summary and ratings history on HCA Holdings click here. For more ratings news on HCA Holdings click here.

Shares of HCA Holdings closed at $74.50 yesterday.

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