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UBS Warburg downgraded Tenet Healthcare (THC
) to reduce from hold.
Analyst Kenneth Weakley say the company's estimated outlier payments relative to base inpatient payments rose from 7.7% in fiscal 2000 (May) to an estimated 24% in fiscal 2003 while the industry average declined. Weakley says he doesn't think Tenet can expect to continue growing its revenue stream much beyond the current levels. He also says questions regarding the appropriateness of Medicare reimbursement can act as an overhang on the stock for an extended time frame and dampen investor enthusiasm. Weakley thinks Tenet may trade down in the low-teen multiples. He sees $2.95 fiscal 2003 earnings per share, and cut the $54 target to $38.