Health Management Associates Inc. (HMA, NYSE) owns and operates general acute care hospitals and psychiatric hospitals in rural and nonurban communities. ... We are raising our target price to $11 on BUY-rated Health Management Associates. We believe the company has opportunities to grow its top line and to expand the profit margin. HMA has made significant strides over the past 12months based on several key metrics, including profitability, admissions volume, physician recruitment and surgical volume. Moreover, as demonstrated by recent acquisitions, the company is now in a stronger position to acquire attractively valued assets that will help to drive future growth. ...
In an environment where hospitals are facing economic pressures, HMA is using its financial resources to make accretive acquisitions. HMA continued its M&A activity by acquiring a controlling interest (60%) in three hospitals in Florida from the non-profit Shands HealthCare. ... HMA is trading at 12 times our EPS estimate for 2011, which we view as attractive.
David Toung, Argus Weekly Staff Report
