Morgan Stanley Reiterates Overweight, $38 PT on Hill-Rom Holdings

Morgan Stanley maintains its Overweight rating and $38 target price on Hill-Rom Holdings HRC as it believes the company's conservative guidance is achievable despite pressures. Morgan Stanley says, "Our model implies decelerating capital sales into FY12, a conservative outlook that remains achievable. Given hospital profitability pressures, investor fears around more limited capital spending are justified in our view. However, Hill-Rom assumed mid-single-digit revenue growth for its North American Acute Care segment (75% of revenue is from capital sales), and therefore a slowdown from 12% growth in FY11 is already baked into numbers." HRC closed at $32.21 per share on Friday.