Oppenheimer’s Michael Wiederhorn Remains Positive on Community Health Systems (CYH) Despite Disappointing Earnings

Community Health Systems (NYSE:CYH) shared tumbled nearly 26% today, after the hospital company reported a surprising loss for the fourth-quarter. However, Oppenheimer analyst Michael Wiederhorn remains bullish on the stock, reiterating an Outperform rating price target of $43, which represents a potential upside of 84% from where the stock is currently trading. Wiederhorn is one of CYH’s biggest bulls, and he is also one of the top analysts rated who cover the stock.

Wiederhorn commented, “CYH reported 4Q:15 adj.-EPS of $0.68 [GAAP: ($0.73)] vs. our estimate/Street consensus of $0.95. Adj-results exclude $0.96 due to an increase in the bad-debt reserve, $0.02 related to legal costs, and $0.04 related for the Quorum spin-off. Setting aside the bad-debt charge, which we believe was related to 2014, the miss was primarily driven by weaker volumes (flu) and to a lesser extent an increase in the med-mal reserve and other factors. Despite the sloppy quarter, CYH issued FY2016 EPS guidance of $3.40-$3.80 (OPCO/Street: $3.71/$3.68) and adjusted EBITDA guidance of $2.900-$3.050B (vs. OPCO/Street: $2.99B/$2.97B).”

“While the results were disappointing and we need to gain comfort around the go-forward rate of the reserve, the outlook was in line,” the analyst concluded.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Wiederhorn has a yearly average return of 17% and a 62% success rate. Wiederhorn has a -23.1% average return when recommending CYH, and is ranked #2 out of 3579 analysts.

Out of the 14 analysts polled by TipRanks, 12 rate Community Health Systems stock a Hold, while 2 rate the stock a Buy. With a return potential of 185%, the stock’s consensus target price stands at $37.28.



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