Leerink Partners Cuts Price Target on Tenet Healthcare (THC) Following Mixed 2Q
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Leerink Partners maintained a Market Perform rating on Tenet Healthcare (NYSE: THC), and cut the price target to $28.00 (from $30.00), following the company's 2Q earnings report. THC posted a mixed 2Q with net revenues of $4.9B, beating consensus by 0.9% while EBITDA of $617MM missed by 1.2%.
Analyst Ana Gupte commented, "We maintain our MP rating but lower PT to $28 from $30 after a mixed quarter with a beat on rev. but missed on EBITDA. Net rev. of $4.9 B beat consensus by 0.9% while EBITDA of $617 MM missed by 1.2%. Soft volumes and higher OPEX expenses were partially offset by improving bad debt and better-than-expected pricing. FY16 EBITDA guidance was reaffirmed with rev. raised by $650 MM at the midpoint while 3Q EBITDA guidance was modestly below Street. We largely maintain our FY16 and FY17 estimates post 2Q while adjust FY16 estimates for seasonality. For FY17, our EBITDA estimate of $2,589 MM (vs. consensus of $2,592 MM) is driven by a) Hospitals operation growth and margin expansion b) ASC business growth and c) Growth in Conifer business partially offset by HIT incentives which are expected to go away in 2017. We reiterate our MP rating but lower PT to $28 given the absence of catalysts, a less compelling valuation, and that FCF ex-NCI is unlikely to meaningfully lower leverage further."
Shares of Tenet Healthcare closed at $23.90 yesterday.
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