Jefferies Raises Price Target on Universal Health Realty Income Trust (UHT), Receives Approval By CDPH

Jefferies is maintaining their Hold rating on shares of Universal Health Realty Income Trust (NYSE: UHT) given the possible revocation of their hospital license at a major facility, Inland Valley Hospital in Wildomar, CA, but believes that the CDPH's recent decision to allow expansion units of that facility to open as a strong positive. They are raising their price target to $40 from $34.

The firm believes that the new Southwest Healthcare System team, operators of the hospital, are a lot better than the one they replaced. They are running the hospital up to the rules and regulations of the state of California and the U.S. government which has been a problem in the past.

Jefferies comments that, "While we believe CDPH's decision is a positive, we note that the outcome of the full certification survey to be conducted by the Center for Medicare and Medicaid Services (CMS) in mid-year 2011 will be crucial. Should CMS decide that Inland Valley has not achieved substantial compliance with the Medicare conditions of participation, it is most likely that the hospital gets shut down and its Medicare and Medicaid reimbursement license is revoked."

They are raising their FY11 and FY12 FFO estimates to $2.67 and $2.67 from $2.60 and $2.31.

For more ratings news on Universal Health Realty Income Trust click here and for the rating history of Universal Health Realty Income Trust click here.

Shares of Universal Health Realty Income Trust closed at $38.63 yesterday.

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