UPDATE: Citigroup Downgrades Community Health Systems to Neutral, Lowers PT on Lowered Forward Estimates

In a report published Monday, Citigroup analyst Gary Taylor downgraded the rating on Community Health Systems CYH from Buy to Neutral, and lowered the price target from $60.00 to $42.00. In the report, Citigroup noted, “We are downgrading our rating on CYH from Buy to Neutral and lowering our 12-month price target from $60 to $42. We are materially lowering our forward estimates for both CYH and HMA (CYH has a definitive agreement to acquire HMA but shareholders have not yet approved the deal). Although HMA represents an accretive acquisition of complimentary assets, the potential deal also increases CYH's financial leverage, operating and legal risk. We are concerned that 3Q13 results for both companies could lead to another round of estimate reductions, offsetting an increasing portion of the EBITDA upside that we'd previously modeled from the ACA.” Community Health Systems closed on Friday at $39.68.