UHS - HCA Universal Health and hospital peers under scrutiny after BMO downgrades

HCA Healthcare ( NYSE: HCA ) and Universal Health Services ( UHS ) are likely to add pressure on healthcare providers on Wednesday after BMO Capital Markets downgraded both hospital operators to sell-equivalent ratings of underperform from market perform.

“While our models still imply modest improvement after 2022, we think the risk is biased to the downside,” the analyst Matthew Borsch wrote in a research note titled “Tough Squeeze on Hospitals.”

Slashing the price target on the industry bellwether HCA ( HCA ) to a Street-low of $160 from $233 per share, Borsch cites “simultaneous pressures on the top and bottom-lines that combine to reduce earnings growth this year (and probably next).” According to Seeking Alpha Wall Street analyst ratings, HCA ( HCA ) had yet to draw a Sell rating.

The analyst has also lowered the price target on Universal Health ( UHS ) to $90 from $133 per share.

Other hospital operators, Tenet Healthcare ( THC ), Community Health Systems ( CYH ), Select Medical Holdings ( SEM ) and Surgery Partners ( SGRY ) are likely to come under scrutiny today in the wake of the downgrades.

BMO’s bearish views follows a recent guidance cut announced by Universal Health ( UHS ) which also sparked an industrywide selloff last week.

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