Piper Jaffray Downgrades Community Health (CYH) to Underweight

Piper Jaffray downgraded Community Health (NYSE: CYH) from Neutral to Underweight with a price target of $7.00 (from $10.00).

Analyst Sarah James sees CY high debt levels dampening long-term growth and is concerned a "shrinking scale could further strain their ability to control expenses."

"We are downgrading CYH to Underweight from Neutral, we view the 4 week 56% gain (4% S&P 500) as excessive and view the move to trading in parity with industry leader HCA as in conflict to the potential for growth for both companies, operational abilities, and balance sheet strength. The companies now trade at near parity for 2018 EV/EBITDA compared to the historical 2-4x spread we view as more appropriate. CYH has a strained balance sheet, the move to divest profitable yet lower margin assets will hit revenue, leverage on supply costs have been an ongoing issue, and only 0.4x progress on the group high 6.7x Debt/EBITDA levels."

For an analyst ratings summary and ratings history on Community Health click here. For more ratings news on Community Health click here.

Shares of Community Health closed at $9.75 yesterday.

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