UPDATE: J.P. Morgan Initiates Coverage on Surgical Care Affiliates on Good Market Position

In a report published Monday, J.P. Morgan analyst Justin Lake initiated coverage on

with an Overweight rating and $34.00 price target. In the report, J.P. Morgan noted, “We are initiating coverage of Surgical Care Affiliates with an Overweight rating and a Dec-2014 price target of $34. We see the company as strongly positioned to be a consolidator in the fragmented ambulatory surgery center (ASC) industry, with its positively differentiated health system partnership strategy driving a capital-efficient growth model both organically and via M&A. SCA has signed up a significant number of health system partners over the last several years, providing strong visibility on its current M&A pipeline. With ASCs positioned as low cost solutions for the inevitable shift to affordability, SCA could see additional benefits here over the intermediate-to-longer term as the industry evolves to reflect an increasing percentage of healthcare spending being driven by individual purchasing decisions (greater price sensitivity), capitated or bundled contracts and ACOs.” Surgical Care Affiliates closed on Friday at $28.93.