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Community Health Systems (NYSE:CYH) stock fell ~9% June 15 after Bank of America downgraded the stock to Neutral from Buy, and cut its price target on the shares to $5.50, from $7.50.
Bofa Global Research Analyst Kevin Fischbeck noted that the decision was taken as the firm expects the company’s valuation to be compressed amid a period of soaring interest rates considering CYH’s high leverage.
The agency thinks that Community’s turnaround should lead to a continued improvement in same-store growth while also improving margin. But the firm was less hopeful that the valuation will show such improvements in the current market scenario, considering the company’s above average leverage.
Fischbeck, however, noted that all of Community’s debt is fixed, thus it does not have interest rate exposure, plus the company has no significant maturities till 2026.
Meanwhile, the SA Quant Rating on CYH is Hold, which factors in measures such as the company’s profitability and growth, among other things. The rating is in contrast to the average Wall Street Analysts’ Rating of Buy, wherein 5 analyst view the stock as Hold, 1 as Buy and 4 have a rating of Strong Buy.
Oscar Health (OSCR) also saw a downgrade at Bank of America to Underperform from Neutral amid the risk of interest rates rising at a faster pace than anticipated.
Source: seekingalpha.com
