Community Health Systems rises on 2014 guidance

Shares of Community Health Systems rose Tuesday on a better-than-expected financial outlook for 2014.

Late Monday, the Franklin, Tenn., hospital operator announced that it expects full-year adjusted earnings before interest, taxation, depreciation and amortization between about $2.93 billion and $3.2 billion, up from its projected 2013 adjusted EBIDTA range of $1.83 billion to $1.85 billion.

Jason Gurda of KeyBanc Capital Markets said in a client note that the midpoint of the 2014 forecast is above his previous estimate of $3.06 billion.

The analyst said that Community Health's core operations have been weaker than expected in recent quarters with declining admissions, but that he's still optimistic about longer-term upside opportunities due to the pending Health Management Associates acquisition and additional health care reform benefits over the next two to three years. Gurda believes the HMA buyout will increasingly add to Community Health's results in 2015 and 2016 and that health care reform benefits should increase as exchanges mature and additional states potentially expand Medicaid.

The $3.9 billion cash-and-stock acquisition of Health Management is scheduled to close at the end of March, pending approval by regulators and shareholders of HMA.

Gurda maintained a "Buy" rating and trimmed his price target on Community Health to $50 from $52.

Shares of Community Health Systems Inc. added $1.23, or 2.9 percent, to $43.14 in afternoon trading.