Here’s Why Hospital Stocks are Missing the Market Rally

Stocks in the hospital sector fell in the midst a broad market rally on Tuesday after a 111-page report from Citigroup analyst Gary Taylor presented a bleak outlook on government health-care funding and downgraded several hospital stocks.

Taylor’s report predicts a long bear market in government spending, along with concerns over decreased Medicare spending in the second half of 2012. The analyst downgraded eight hospital companies, including four downgrades to sell.

“Federal and state governments are still deficit-challenged and just beginning a cycle of spending cuts,” said Taylor in his note to clients. “Congress will likely have to raise the U.S. debt ceiling again in early [2013]. The precedent has been set that such increases must be funded by spending cuts.”

Here’s how hospital stocks reacted to the news:

Tenet Healthcare Corp. (NYSE:THC): THC shares recently traded at $4.96, down $0.17, or 3.31%. They have traded in a 52-week range of $3.46 to $7.70. Volume today was 8,650,735 shares versus a 3-month average volume of 9,158,390 shares. The company’s trailing P/E is 11.95, while trailing earnings are $0.42 per share.

Universal Health Services Inc. (NYSE:UHS): UHS shares recently traded at $37.71, down $1.15, or 2.96%. They have traded in a 52-week range of $31.35 to $56.46. Volume today was 1,639,068 shares versus a 3-month average volume of 1,062,440 shares. The company’s trailing P/E is 10.95, while trailing earnings are $3.44 per share.

Sun Healthcare Group, Inc. (NASDAQ:SUNH): SUNH shares recently traded at $3.75, down $0.13, or 3.35%. They have traded in a 52-week range of $2.06 to $15.01. Volume today was 371,834 shares versus a 3-month average volume of 348,283 shares. The company’s trailing earnings are $-12.57 per share.

AMN Healthcare Services Inc. (NYSE:AHS): AHS shares recently traded at $4.21, down $0.22, or 4.97%. They have traded in a 52-week range of $3.60 to $9.33. Volume today was 392,381 shares versus a 3-month average volume of 199,220 shares. The company’s trailing earnings are $-0.63 per share.

HCA Holdings Inc (NYSE:HCA): HCA shares recently traded at $21.64, down $0.39, or 1.77%. They have traded in a 52-week range of $17.03 to $35.37. Volume today was 1,943,414 shares versus a 3-month average volume of 2,924,740 shares. The company’s trailing P/E is 13.06, while trailing earnings are $1.66 per share.

Health Management Associates Inc. (NYSE:HMA): HMA shares recently traded at $7.25, down $0.12, or 1.63%. They have traded in a 52-week range of $6.06 to $11.74. Volume today was 2,563,351 shares versus a 3-month average volume of 3,668,640 shares. The company’s trailing P/E is 10.46, while trailing earnings are $0.69 per share.

Lincare Holdings Inc. (NASDAQ:LNCR): LNCR shares recently traded at $24.81, down $0.9, or 3.5%. They have traded in a 52-week range of $19.65 to $31.79. Volume today was 1,188,190 shares versus a 3-month average volume of 858,054 shares. The company’s trailing P/E is 13.06, while trailing earnings are $1.90 per share.

Lifepoint Hospitals Inc. (NASDAQ:LPNT): LPNT shares recently traded at $36.29, down $0.86, or 2.31%. They have traded in a 52-week range of $28.95 to $43.45. Volume today was 619,659 shares versus a 3-month average volume of 442,036 shares. The company’s trailing P/E is 11.59, while trailing earnings are $3.13 per share.

Kindred Healthcare Inc. (NYSE:KND): KND shares recently traded at $10.97, down $0.8, or 6.8%. They have traded in a 52-week range of $7.67 to $28.99. Volume today was 1,056,903 shares versus a 3-month average volume of 930,589 shares. The company’s trailing P/E is 12.45, while trailing earnings are $0.88 per share.

AmSurg Corp. (NASDAQ:AMSG): AMSG shares recently traded at $25.96, down $0.08, or 0.31%. They have traded in a 52-week range of $19.08 to $28.00. Volume today was 130,147 shares versus a 3-month average volume of 164,212 shares. The company’s trailing P/E is 17.14, while trailing earnings are $1.52 per share.

MEDNAX, Inc. (NYSE:MD): MD shares recently traded at $70.68, down $1.33, or 1.85%. They have traded in a 52-week range of $58.48 to $75.47. Volume today was 620,259 shares versus a 3-month average volume of 333,609 shares. The company’s trailing P/E is 16.07, while trailing earnings are $4.40 per share.

Team Health Holdings, Inc. (NYSE:TMH): TMH shares recently traded at $22.50, up $0.43, or 1.95%. They have traded in a 52-week range of $14.80 to $24.13. Volume today was 153,621 shares versus a 3-month average volume of 170,203 shares. The company’s trailing P/E is 87.55, while trailing earnings are $0.26 per share.

To contact the reporter on this story: Gina Smith at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com