Wells Fargo Downgrades Community Health (CYH) to Market Perform; Allegations Hurting Admissions Trends - Could Continue 2-3 Qtrs

Wells Fargo downgraded Community Health (NYSE: CYH) from Outperform to Market Perform with a price target range of $14-$19 from $34-40.

Wells analyst says, "We are downgrading shares of CYH based on the fact that we had expected CYH’s admission practices would see little or no impact from the allegations made by Tenet (NYSE: THC)(Market Perform); this does not appear to be the case. Same-store inpatient admissions declined by 7.0% overall and by a greater amount at smaller facilities due to what the company described as negative press it has received because of the allegations by Tenet and subsequent OIG investigation. Our prior view which was consistent with the company’s expectations had been that CYH’s admission practices were in line with the industry and therefore would not change significantly. We believe this view is incorrect and that it may take 2-3 quarters before the company’s inpatient trends stabilize...2011E and 2012E EPS go to $3.30 and $3.58 from $3.29 and $3.74 respectively."

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

Shares of Community Health closed at $17.43 yesterday.

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