Back to top

Analyst Blog

On Jun 6, 2014, Tenet Healthcare Corporation (THC - Analyst Report) scaled a new 52-week high of $50.25. The company’s shares have been riding high, mainly driven by its efforts to improve patient care and its mergers and acquisition activities.

Earlier, Tenet Healthcare had reported first-quarter 2014 loss that however, compared favorably with the Zacks Consensus Estimate. This Zacks Rank #3 (Hold) hospital service provider had previously delivered positive earnings surprises in two out of the last four quarters with an average beat of 9.99%.

Following Tenet Healthcare’s earnings release on May 5, 2014, its shares gained 8.5% to close at $49.22 in the last trading session. The year-to-date return from the stock was 16.85%, much above the S&P 500’s return of 5.46% and that of another player in the industry, Community Health Systems, Inc. (CYH - Snapshot Report) with returns of 14.31% over the same period.

Tenet Healthcare has been upfront in its M&A activities over the last one year. These endeavors have also helped the company to deliver improved results. Of these, the most important was the Vanguard acquisition. Tenet Healthcare expects synergies from this acquisition in 2014, which is likely to increase in the long run. The proposed acquisition of Emanuel Medical Center announced in Feb 2013, the collaboration with Yale New Haven Health System in Connecticut in Mar 2014, contract extension with Cigna Corp. (CI - Analyst Report) in Mar 2014 and the recent acquisition of Texas Regional Medical Center (last week) are also expected to boost operations and enhance membership.

Tenet Healthcare’s formation of Accountable Care Organization (ACO) also looks promising. Over the past one year, the company has collaborated with Blue Cross and Blue Shield of Texas (BCBSTX), Aetna Inc. (AET - Analyst Report) and Florida Blue. These initiatives are in sync with the company’s agenda to provide high-quality care to medical members at an affordable price, which going forward should attract more customers.

Tenet Healthcare’s outpatient business has been doing well for quite some time and has contributed immensely to revenues over the past one year. With the launch of the MedPost Urgent Care, a national brand of urgent care centers in May 2014, this business is expected to improve further as urgent care forms an important part of the outpatient business.

Such upgrades in its services, along with expansion of inorganic growth strategies, keep us optimistic about the stock’s performance. The long-term growth rate of the stock is 12.20%.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%