On Jan 22, 2013, we upgraded
Tenet Healthcare Corporation
) to Outperform from Neutral based on increasing operating
revenues and growth through acquisitions. Moreover, the recent
strategic plans of this health care services company are expected
to generate growth, enhance capital structure and boost
Why the Upgrade?
Tenet Healthcare has been consistently growing its operating
revenues since 2006. Additionally, the company has been steadily
expanding its operating capacity via acquisitions and alliances.
The renewal of the service contract with
) in the second half of 2012 is also important for Tenet
Healthcare as it is one of the largest contracts owned by it.
The Zacks Consensus Estimate for Tenet Healthcare's
fourth-quarter 2012 revenue stands at $2.52 billion, indicating a
5% improvement over the year-ago quarter.
Moreover, Tenet Healthcare is trying to enhance business
growth and optimize capital structure through financial and
strategic plans comprising acquisitions, share repurchases, debt
repayment and a reverse stock split. While the acquisitions will
be directed toward strengthening the company's main business
lines, the issue of new debt has already boosted financial
flexibility and improved the debt maturity profile.
Going forward, the planned share buyback will enhance earnings
per share and boost shareholder value. Thus, we believe that the
plan will be beneficial for the company.
We expect Tenet Healthcare to generate a 74.3% improvement in
earnings per share in the fourth quarter of 2012 over the
prior-year quarter. Consequently, the Zacks Consensus Estimate
stands at 70 cents per share. This healthcare service provider,
which carries a Zacks Rank #3 (Hold), is yet to announce the date
for its fourth-quarter earnings release.
Other Stocks to Consider
Other stocks in the medical sector that are currently
performing well include
Acadia Healthcare Company, Inc.
) - Zacks Rank #1 (Strong Buy) and
) - Zacks Rank #2 (Buy).
ACADIA HEALTHCR (ACHC): Free Stock Analysis
CIGNA CORP (CI): Free Stock Analysis Report
MEDNAX INC (MD): Free Stock Analysis Report
TENET HEALTH (THC): Free Stock Analysis
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