The Build Back Better (BBB) plan seems to be an “underappreciated catalyst” for Community Health Systems Inc (NYSE:CYH)
The Community Health Systems Analyst: BofA Securities analyst Kevin Fischbeck upgraded the rating for Community Health Systems from Underperform to Buy, while raising the price target from $14 to $16.
The Community Health Systems Thesis: The impact of BBB on bad debt is likely to be “a meaningful tailwind for hospital companies,” and could boost the company’s EBITDA by 6%, Fischbeck said in the upgrade note.
He added that there could be further expansion in multiples from improved leverage and free cash flows resulting from BBB.
“This optionality represents a compelling return on what has already been an improving core business, resulting in modest valuation upside even without passage,” the analyst wrote.
“With CYH having materially improved its margins and same-store growth in recent years — despite the difficult operating environment of COVID — we see the company positioned to see the largest net benefit among peers from the passage of expansion provisions in the BBB bill,” Fischbeck explained.
CYH Price Action: Shares of Community Health Systems had risen by 3.14% to $13.12 at the time of publication Monday morning.
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