Pali Research Initiates Coverage on Tenet Healthcare (THC) with a Buy; Comments on Bonds
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Pali Research initiates coverage on Tenet Healthcare (NYSE: THC) with a Buy. Price target $8.25.
Pali analyst says, "What a difference a COO makes: Without COO Stephen Newman, MD, we seriously doubt whether THC could have delivered on the turnaround promise even this much. He is the catalyst for the physician recruitment effort that is driving improvements in volumes and for the innovative Medicare Performance Initiative, a key program that will transform THC’s money-losing and inefficient Medicare patient treatment protocols into money-making, optimal and higher quality outcomes for patients, physicians and the company. Further, the cultural change from ‘management by anecdote’ to ‘management by data’ and accountability, now essentially complete, could not have been accomplished without his brand of leadership."
"We initiate coverage of Tenet Healthcare’s capital structure with a positive stance as we see THC being able to continue to deliver strong operating results, even in a weak economy, which in turn drive its ability to continue to deleverage its balance sheet...Although most of the ‘easy’ money (heaven help us, but nothing about THC is ever easy) in the bonds has been made, and although we see the controversial and volatile equity as the likely source of larger investment returns, we still like THC’s larger credit issues for the prospects of continued repurchases, and/or refinancings, with the potential for credit rating upgrades. We expect THC to continue to deleverage and would encourage an equity offering and/or additional issues of convertible preferred stock or debt to reduce the current 4.4x pro forma leverage ratio further."
To see more analyst ratings on THC Click Here.
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