) to neutral from sell.
Analyst Andreas Dirnagl says he is appeased by Tenet's stock buyback expansion program. The hospital operator says it will buy back an additional 16.3 million shares. Dirnagl says on a conference call last week, Tenet provided some parameters around its future financial performance, and he says he thinks this share repurchase should provide some support to the stock.
However, the risk to Tenet's story remains, including a transition to a new pricing strategy, a potential backlash by payers and patients, and an audit by the Department of Health and Human Services. The company is the subject of an investigation into allegations of medical and billing fraud Tenet also said its 2003 and 2004 profits would fall short of expectations.
Dirnagl thinks a resolution to these matters lies months away. He doesn't argue that shares are cheap, but even with a new buyback program putting a floor on stock, he sees limited upside and thinks this warrants his neutral rating.