Sterne Agee Comments On Community Health Systems' Pre-Announcement

In a report released Tuesday, Sterne Agee commented on Community Health Systems' CYH pre-announcement of its fourth quarter and full year 2014 results.

Although the company reported solid admissions growth, revenue and EBITDA came in slightly short of consensus expectations, but still above Sterne Agee’s projections.

"Given the weaker EV/EBITDA multiple to the group," the firm does not expect the results to impact on Community Health Systems’ stock valuation, and thus maintained an $83 price target and Buy Rating. "Valued at 6.8x consensus 2015 EV/EBITDA at Friday's closing price versus the 7.3x current average for the group, we believe some of the revenue and EBITDA shortfall to consensus is reflected in the valuation," the analyst note explained.

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For the fourth quarter of 2014, Community Health Systems’ same facility admissions declined 0.2 percent (compared to the consensus estimate of -1.5 percent), while adjusted admissions increased 2.7 percent (versus the 0.3 percent consensus target). "The higher flu season favorably impacted admissions, though didn't add much to revenue and EBITDA given the lower acuity/margin characteristics.”

Net revenue came slightly short of expectations at $4.9 billion, versus a consensus just above $5 billion.

Shares of Community Health Systems recently traded at $48.43, down 3.5 percent.