Market Overview

These Analysts Don't Like Universal Health Services Anymore


In a report published Wednesday, Sterne Agee analyst Brian Wright downgraded Universal Health Services, Inc (NYSE: UHS) from Neutral to Underperform, while reducing the price target from $136 to $98.

The company's 8K filing indicates that the ongoing investigations had expanded to about 20 facilities across several states. Even the corporate entity had been included in the False Claim investigations.

"As such, we believe there is growing legal/regulatory risk in owning UHS shares that is becoming harder to quantify. Using any sort of reasonable settlement parameters barring unforeseen recklessness, we estimate that UHS has the financial capacity to handle any fines/penalties/settlement terms," Wright said.

The analysts added, however, that the headline risk of further investigative escalations was "too great."

The EPS estimates for 2015 and 2016 have been reduced from $6.48 to $6.24 and from $7.21 to $6.51, respectively. The reduction reflects lower revenue collections in view of the "nature of the investigations."

Share repurchases have been excluded, as it would be prudent for the company to "preserve capital for potential fines and settlements." Moreover, Universal Health has disclosed that CMS plans to continue a payment suspension for its RiverPoint Behavioral Health facility for another 180 days, Wright added.

Latest Ratings for UHS

Oct 2019MaintainsEqual-Weight
Jul 2019MaintainsEqual-Weight
Apr 2019MaintainsEqual-WeightEqual-Weight

View More Analyst Ratings for UHS
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Posted-In: Sterne AgeeAnalyst Color Downgrades Price Target Analyst Ratings


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