- RBC Capital Market reduced the target price for HCA Healthcare Inc (NYSE:HCA) from $291 to $267 (26.5% upside), noting the shares were well oversold on Friday (-22%) after a ~5.5% guide-down on known labor headwinds.
- The analysts continue to view the labor backdrop as largely transitory and believe HCA management is well equipped to execute amid near-term uncertainty.
- "We see ample evidence of irrational selling sector-wide on Friday and remain buyers of our O-rated hospitals (HCA, THC, CYH) on Friday's sell-off," analysts tell investors.
- Related: HCA Healthcare's Softer Guidance Pulls Hospital Peers Down.
- RBC Capital notes management's ~5.5% EBITDA guide-down for the year (~2/3 driven by labor and ~1/3 by the lower yield on lower-acuity COVID volume) prompted the broad sell-off.
- Consistent with THC's commentary, agency labor pressure is not stabilizing as quickly as hoped.
- The most significant unknown for HCA (and peers) is the duration of labor headwinds.
- "We view HCA's 5-6% guide-down as likely prudent amid unprecedented labor costs early in a transition year out of the pandemic and consistent with management's characteristic conservatism," analysts wrote.
- The analysts continue to have high conviction in HCA over the long term and believe that the recent pullback presents an attractive entry point for patient investors.
- Price Action: HCA shares are up 0.28% at $211.20 during the market session on the last check Monday.
