Skip to main content

Market Overview

Bank Of America Says Healthcare Reform Boosting Profits Within Hospital Sector


Improving profits at hospital companies is one likely outcome of the Affordable Care Act, according to an analyst who boosted price targets of a raft of stocks in the sector Tuesday.

The biggest ramp-up is expected during the second quarter. Fewer bad debts and charity cases constitute important gains for hospitals, Bank of America analyst Kevin Fischbeck said in a note.

Top picks for Fischbeck: Community Health Systems (NYSE: CYH) and HCA (NYSE: HCA). He boosted his price target for HCA to $65 a share, from $62, and maintained a target for Community Health of $63 a share.

"Reform benefits were clear and immediate in the first quarter," when hospital companies posted big drops in self-paying patients and uninsured admissions, with corresponding gains in those with Medicaid insurance.

"This indicates that once people get insurance, there is an immediate change in how payments flow through the sytem," Fischbein said, noting that first-quarter results were hurt by a relative lack of influenza and bad weather.

Much of the first-quarter improvements came through Medicaid expansion, with the benefit of the more controversial insurance exchanges lagging. Fischbeck, however, expects as insurance coverage from the exchanges continues to ramp up dramatically, especially during the second quarter, benefits to hospital companies should be substantial.

Likewise, a boom in Medicaid enrollment should peak at a more than 90 percent gain in the second quarter.

Other companies singled out by Fischbein include LifePoint Hospitals (NASDAQ: LPNT), Tenet Healthcare (NYSE: THC) and Universal Health Services (NYSE: UHS).

All the shares mentioned by Fischbeck were up slightly in late-morning trading except HCA, which was down by less than one percent.

Latest Ratings for CYH

Feb 2021Credit SuisseMaintainsUnderperform
May 2020OppenheimerMaintainsOutperform
Feb 2020B of A SecuritiesMaintainsUnderperform

View More Analyst Ratings for CYH
View the Latest Analyst Ratings


Related Articles (CYH)

View Comments and Join the Discussion!

Posted-In: Bank of America Kevin FischbeckAnalyst Color Analyst Ratings

Latest Ratings

MTZCredit SuisseMaintains114.0
APPSRoth CapitalMaintains100.0
ZBHWells FargoMaintains183.0
CWells FargoMaintains82.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at