AP News

Healthcare Services rises as analyst sees growth


NEW YORK (AP) — Shares of Healthcare Services Group Inc. rose Monday after a UBS analyst said the company, which provides housekeeping and food services to hospitals and nursing homes, should be able to sustain its strong growth.

THE SPARK: Analyst A.J. Rice began covering Healthcare Services with a "Buy" rating and a price target of $27 per share. That suggests a gain of 18 percent from Friday's close.

THE BIG PICTURE: The Bensalem, Pa., company, said its net income rose 11 percent to $38.2 million in 2011, while revenue grew 15 percent to $889.1 million. Through June, Healthcare Services Group's revenue has increased 26 percent, while net income is up 13 percent.

THE ANALYSIS: Rice said the company has major growth opportunities because only 15 percent of long-term care facilities outsource their housekeeping and laundry services, while only 4 percent of dietary services are outsourced. Healthcare Services is the market leader in the industry, he added.

SHARE ACTION: Up 92 cents, or 4 percent, to $23.78 in afternoon trading. The shares are trading around all-time highs, and they peaked at $24.11 earlier Monday.


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