Merrill Lynch added Triad Hospitals (TRI) to its Focus One list.
Analyst Doug Simpson says Triad is the leading provider of acute care service in secondary and rural markets across the country. Since the spin-off from HCA, he says Triad has developed a strong track record of meeting or beating the financial community's estimates.
Simpson thinks fundamentals are strong, and the outlook is solid. He considers the current valuation attractive. Despite Triad's excellent track record, shares trade at a modest 12 times the 2004 earnings per share estimate. Further, shares trade at a substantial discount to hte depressed hospital group average multiple of roughly 14.
Simpson raised the $38 target to $41, and believes shares can trade at 16 time the 2004 earnings per share estimate.