KeyBanc Starts Hill-Rom Holdings (HRC) at Hold

KeyBanc initiated coverage on Hill-Rom Holdings (NYSE: HRC) with a Hold rating.

Analyst Matthew Mishan said, "We are initiating coverage of Hill-Rom Holdings, Inc. (HRC-NYSE) with a HOLD rating, and while we view its patient-centric positioning in the hospital favorably, volatility is likely to persist in the core business, with change being gradual."

"More specifically, we believe that: 1) HRC is the dominant N.A. player (70% market share of U.S. installed base) with its core hospital bed products, which are positioned to address key industry trends, such as improved patient outcomes, reduced length of stays and caregiver safety; 2) the population of beds in developed markets is likely to show limited growth over the near to medium term, competition could slowly erode its market share and volatility, albeit to a lesser extent than in fiscal 1Q14, is likely to persist in both its Capital and Rental businesses; 3) the management team understands this dynamic and appears driven to: a) accelerate growth in other adjacencies, reducing dependence on its core product; b) restructure the business to improve margins; and c) generate consistent free cash flow, allowing for M&A and to return cash to shareholders; and 4) valuation remains mixed, and while it does trade at a relative discount to the group on an EV/EBITDA basis, it seems appropriate given some of the near-term challenges and our expectation that change will be gradual," he said.

For an analyst ratings summary and ratings history on Hill-Rom Holdings click here. For more ratings news on Hill-Rom Holdings click here.

Shares of Hill-Rom Holdings closed at $37.85 yesterday.

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