Barclays' Joshua Raskin has downgraded HealthSouth Corp HLS to Underweight from Equal Weight on unfavorable risk/reward.
Following are Raskin's seven reasons for the downgrade:
- "We believe there is increasing scrutiny around IRF payments in the Medicare program, including updated MedPAC pressures."
- "Medicare Advantage historically has not utilized services at HealthSouth at the same rate as Medicare FFS."
- "Acquisitions continue to obscure unimpressive organic growth for the IRF segment."
- "Leverage is up substantially over the past 1.5 years as a result of the company's recent acquisitions of CareSouth, Reliant and Encompass."
- "We believe the cross-selling opportunity between the inpatient rehab segment and home-health segment is overstated."
- "Based on HealthSouth's current valuation and our outlook for 2016 and 2017, we believe there is little room for multiple expansion."
- "We believe the CJR payment model presents a potential risk for HealthSouth."
Meanwhile, Raskin has cut the price target by $3 to $42, while maintaining the full-year EPS at $2.45.
At the time of writing, shares of HealthSouth fell 3.13 percent to $38.32.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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Posted In: Analyst ColorShort IdeasDowngradesHealth CarePrice TargetAnalyst RatingsTrading IdeasGeneralBarclaysJoshua Raskin
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