Deutsche Bank Downgrades Vanguard Health Systems (VHS) to Hold; Headwinds Appear Too Strong

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Deutsche Bank downgraded Vanguard Health Systems (NYSE: VHS) from Buy to Hold, price target lowered from $17 to $12.

Deutsche analyst says, "While VHS now screens as one of the “cheapest” acute care hospital stocks on an EV/EBITDA basis, we believe market participants in the investment community are making several critical adjustments to the company’s TEV that, in fact, put the company’s valuation more in-line. Specifically, the adjustments to TEV are the pro forma debt associated with the Valley Baptist (South Texas) acquisition (which will show up in the FQ1: 2012 balance sheet), the present value of VHS’ Detroit Medical Center (DMC) commitment (which we estimate at ~$350 million) and DMC’s pension liability ($188 million). We are now fully reflecting these latter two adjustments into our TEV calculation, and this causes our target price to land at a lower place."

For more ratings news on Vanguard Health Systems click here and for the rating history of Vanguard Health Systems click here.

Shares of Vanguard Health Systems closed at $9.49 yesterday, with a 52 week range of $9.08-$18.58.

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