HCA Healthcare is Tuesday's IBD Stock Of The Day, as the acute-care hospital operator approaches a new buy point after holding a prior breakout, offering investors exposure to a health-related play as medical stocks hold up in the current market.
Medical and health care stocks tend to do well in tricky markets and economic conditions because government and private insurance covers the vast majority of health care costs, making them recession-resistant.
Nashville-based HCA Healthcare is one such option for investors. HCA owns and operates general acute-care hospitals in the U.S. and United Kingdom. While elective surgeries are usually a big moneymaker for hospitals, many were put on hold during the Covid pandemic. However, moving into 2023, more patients are returning to the operating room for procedures, giving HCA a boost.
Last week, Argus analyst David Toung wrote to analysts that HCA is seeing higher non-Covid patient admissions and higher surgical volume while also benefiting from favorable labor cost trends. Toung raised the price target on HCA Healthcare to 310, up from 285.
In late April, HCA Healthcare easily topped Wall Street earnings and revenue estimates. HCA reported Q2 EPS jumping 20% to $4.93 with revenue increasing 4% to $15.59 billion. Both were the second straight quarter of slightly accelerating gains.
HCA Healthcare also increased its 2023 guidance. Executives expect revenue of $62.5 billion-$64.5 billion, up from the previous $61.5 billion-$63.5 billion. HCA sees profits of $17.25-$18.55 per share. Its prior guidance included EPS of $16.40-$17.60.
Meanwhile, analysts predict 2023 earnings growing 6% to $18.06 per share with revenue increasing 5% to $63.42 billion, according to FactSet.
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HCA Healthcare Stock
Shares of HCA dipped 0.70% to 275.57 Tuesday in light volume. HCA Healthcare stock is consolidating around the 21-day line, trading tightly. Investors could use a move above May 12 high of 280.27 as an entry point, with HCA clearing short-term levels.
Shares have been trading above the 50-day moving average since March 29 and hit a recent high of 294.02 on April 21 on Q1 earnings. However, HCA Healthcare stock has moved sideways since then, dropping 5% since its April highs.
Technically, HCA stock is in range of a 269.19 buy point, either from a huge cup-with-handle base or treating the handle as its own flat base. Shares cleared that entry on April 5, part of a seven-week win streak.
It's also possible that shares will forge a new base by the end of next week.
On Tuesday, Mizuho analyst Ann Hynes also raised the firm's price target on HCA to 305, up from 298. Hynes maintained a "Buy" rating on HCA Healthcare stock. Hynes wrote coming out of first-quarter earnings there are better than expected demand trends.
The analyst added there is more "upside potential than downside risk" for hospitals if the strength in Q1 continues for the remainder of the year.
Tenet Healthcare, another hospital operator, also is finding support near the 21-day line following an early April breakout. THC stock edged up 0.6% Tuesday.
HCA Healthcare stock ranks third in IBD's Medical-Hospitals industry group. HCA has a 91 Composite Rating out of 99. The stock also has a 92 Relative Strength Rating. The EPS Rating for HCA is 94 out of 99.
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