HCA Healthcare's Peak Valuation Limits Upside After Years of Outperformance, Morgan Stanley Says

MT Newswires Live12-16

HCA Healthcare's (HCA) strong execution and aggressive buybacks have established it as a sector "bellwether," but the stock has little margin for "setbacks" after significant outperformance and a peak valuation, Morgan Stanley said in a report Monday.

Despite acknowledging hospital operator's strong execution, which has seen the stock outperform the Nasdaq by 120% and the overall Healthcare sector by 175% over the past five years, the investment bank warned that the stock is now trading at a "new peak valuation multiple," according to the report.

The core concern revolves around the sustainability of the recent growth drivers, Morgan Stanley said.

Analysts noted that the significant boost from the post-COVID utilization rebound and the doubling of Affordable Care Act members are likely to slow.

Morgan Stanley has downgraded HCA Healthcare to underweight from equalweight, with a price target of $425.

Shares of the company were down more than 2% in recent Monday trading.

Price: 473.70, Change: -10.35, Percent Change: -2.14

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