Zacks Investment Research downgraded
Tenet Healthcare Corp.
) to a Zacks Rank #4 (Sell) on Jan 21, 2014.
Why the Downgrade?
Tenet Healthcare delivered negative earnings surprise in three
out of the last four quarters with an average surprise of -3.33%.
Over the last 30 days, estimates moved downwards leading to a
1.4% decline in the Zacks Consensus Estimate for full-year 2014
to $2.72 per share. Notably, the company has been witnessing
downward estimate revisions post reporting mixed third-quarter
Tenet Healthcare's third-quarter earnings per share of 45
cents, which although higher than the year-ago earnings, missed
the Zacks Consensus Estimate by 2.2%.
Tenet Healthcare has been experiencing high levels of
operating expenses for quite some time. During the last reported
quarter, the company witnessed higher operating costs due to
increased salaries, wages and benefits, and other operating
expenses. Bad debt expenses also increased due to higher
uninsured revenues. As Tenet Healthcare serves a large number of
uninsured and underinsured patients with a high burden of
co-payments and deductibles, and expects a high level of
uncollectible accounts in the upcoming quarters, bad debt
expenses are expected to rise.
Moreover, the company is facing stronger volume headwinds than
when it formed the business plans. Thus, inpatient volume is
expected to remain soft in the fourth quarter of 2013. Tenet
Healthcare also has a high debt burden. Declining cash flows
further adds to the woes. Tenet Healthcare expects adjusted
EBITDA of $400-$450 million in fourth-quarter 2013 anticipating
weak inpatient volume growth and a less attractive payer mix to
continue through the quarter.
Tenet Healthcare is scheduled to release its fourth quarter
and full-year 2013 results in the last week of Feb 2014. The
Zacks Consensus Estimate for the quarter is pegged at 34 cents
per share, representing a year-over-year decline of 33.7%. Over
the last 7 days, the Zacks Consensus Estimate for full-year 2013
declined 2.7% to $1.78 per share.
Other Stocks to Consider
However, some better-ranked stocks in the healthcare services
VCA Antech Inc.
Addus HomeCare Corporation
). All the three stocks carry a Zacks Rank #2 (Buy).
ADDUS HOMECARE (ADUS): Free Stock Analysis
LCA-VISION INC (LCAV): Free Stock Analysis
TENET HEALTH (THC): Free Stock Analysis
VCA ANTECH INC (WOOF): Free Stock Analysis
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