Amid uncertainty surrounding the Affordable Care Act and with looming midterm elections that threaten to ignite a renewed debate around health care, Lazard Senior Analyst Thomas Gallucci sees value in hospital operators with acquisition deals.
“Our favorite name in the group is Universal Health Services (UHS), and there are two key reasons behind our recommendation, and they’re both related to the company’s acquisition of Psychiatric Solutions (PSYS),” Gallucci said.
Gallucci considers UHS a “buy” for the diversification the PSYS acquisition will provide in addition to the company’s solid fundamentals and synergy opportunities. His other “buy”-rated stock is Community Health (CYH).
“Historically [CYH is] not only very strong at the blocking and tackling of the hospital business, but they also have a very good track record of buying and integrating, and ultimately running better not-for-profits,” Gallucci said. “They have a strong acquisition track record in addition to understanding the basics and running the business very well.”
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