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UPDATE - UBS Initiates Coverage on UHS (UHS) with a Neutral; Strong Balance Sheet, But Soft Las Vegas Market

June 20, 2012 12:32 PM EDT Send to a Friend
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Price: $113.54 +0.87%

Rating Summary:
    14 Buy, 6 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 23 | New: 21
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UPDATE - UBS initiates coverage on UHS (NYSE: UHS) with a Neutral rating. PT $43.

Analyst, A.J. Rice, said, "Behavioral health continues to post strong results and now contributes approximately 45% of UHS revenue and 60% of company profits. Internal revenue growth in Behavioral is expected to be 6.0-6.5% in 2012, and this rate of top-line performance is expected to drive same-facility margin expansion of 30-50 bps. The company remains on track to realize the remaining 50% of its $35 mln-$45 mln targeted synergies from the PSI deal by the end of 2013. Further, the company expects to close the margin gap between legacy UHS and PSI facilities over time."

"Our Price Target assumes UHS shares trade at ~5.8x our 2013 EBITDA estimate, which is a modest discount to recent history. We are using this discount because we believe Q2 expectations may be too high."

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