UPDATE: Deutsche Bank Downgrades HealthSouth Corp. to Hold, Lowers PT

In a report published Friday, Deutsche Bank downgraded its rating on HealthSouth Corp. (NYSE: HLS) from Buy to Hold, and lowered its price target from $28.50 to $25.00.

Deutsche Bank noted, “HLS is an extremely well-managed company with a strong business model, excellent balance sheet; it maintains nice flexibility to return more capital to shareholders due to its FCF profile. HLS' revenue growth prospects remain underpinned by good organic volume trends, acceleration of de novos and JV/M&A opportunities. Despite our favorable view for ‘HLS the company,' we see a more balanced risk/reward for ‘HLS the stock,' with the potential for Medicare pressure over the next 12-24 months the key gaiting factor for HLS' valuation multiple. Hold more accurately reflects our stance on HLS shares; PT reduced to $25 from $28.50 (7.0x 2014 EV/EBITDA).”

HealthSouth Corp. closed on Thursday at $23.86.

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