Prudential Cuts Tenet Healthcare to 'Hold'
Prudential downgraded Tenet Healthcare (THC ) to hold from buy.
On Thursday the company announced an investigation of alleged unnecessary medical procedures and false billings. Analyst David Shove says U.S. attorneys executed a search warrant on two cardiac surgeons affiliated with Redding Medical Center, a Tenet hospital. Although neither Tenet nor the medical center are target in investigation, Shove thinks it creates many unknowns for Tenet and greatly clouds earnings per share visibility.
Shove believes Tenet is likely to experience more noise and volatility in the coming months. Even though he estimates the doctors alone will have minimal earnings per share effect, Shove says the investigation's future clouds visibility on Tenet shares.