Bearish on the Broader Sector, Barclays Labels One Hospital Stock a Buy

HCA shares have had a big year already

Aug 14, 2018 at 9:26 AM
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Barclays this morning released a note initiating coverage on domestic hospital operators with a tepid "neutral" rating, saying payment models shift the benefits to lower-cost care providers. Among the individual names mentioned, Universal Health Services (UHS) and Tenet Healthcare (THC) were both started with "equal weight" ratings, and Community Health Systems (CYH) was hit with an "underweight" designation. However, Barclays is bullish on HCA Healthcare Inc (NYSE:HCA).

HCA stock was given an "overweight" rating from the covering analyst, along with a $150 price target. This represents a nearly 17% premium to the equity's settlement of $128.65 from Monday, and sits deep in all-time high territory. The shares just touched a record peak of $131.10 thanks to an impressive run up the charts in 2018, adding more than 47% year-to-date. HCA is up 0.9% at $129.79 before the open. 

It's not surprising to note then that most other analysts covering the security are already bullish. By the numbers, 11 of the 16 brokerage firms in coverage have "strong buy" ratings on the stock. On the other hand, the average 12-month price target of $131.57 is easily within striking distance, so more upside from the shares could draw a round of price-target hikes.

Meanwhile, options activity at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) has been very bullish in recent weeks. HCA Healthcare's 10-day call/put volume ratio across those exchanges comes in at 3.86, ranking in the 78th annual percentile, showing an unusually strong demand for long calls over puts.

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