) posted 64 cents, vs. 76 cents, second-quarter adjusted earnings per share. Prudential cut its rating to underweight from neutral.
Analyst David Shove says 64 cents second-quarter adjusted EPS (which excludes a gain from the sale of France operations) was 11 cents below consensus and 8 cents below his estimate due to a resurgence of old problems. He notes in the second quarter McAllen Texas market admissions weakened once more, while an uninsured admissions rise prompted a sharp increase in bad debt reserves; hence, acute care operations profitability fell sharply.
Shove says that without some relief in the Texas market and a better bad debt outlook, the company's EPS power is at risk to further deterioration.
He cut his $3.17 2005 EPS estimate to $3.00, and $3.47 2006 forecast to $3.43. He also lowered his $50 price target to $45.