UPDATE: Deutsche Bank Upgrades Vanguard Health Systems to Buy on Cash Flow Outlook

Deutsche Bank upgraded Vanguard Health Systems

from Hold to Buy and raised the price target from $14.00 to $17.00. Deutsche Bank noted, "VHS is the only sub-$2 billion market cap name in the group, making it the only true small-cap to play. Fundamentally, we believe VHS' cash flow outlook should be better following several quarters of weak A/R collections and timing delays of working capital. We believe VHS' insurance segment has unique opportunities in several key markets, and the co.'s appetite to pursue risk-based reimbursement models make it among the most forward-thinking in the group vis-à-vis health care reform. Our valuation target for VHS works out to be an undemanding 6.2x CY 2014 EV/EBITDA, and we include the significant DMC pension liability into TEV for conservatism." Vanguard Health Systems closed at $13.47 on Tuesday.