UHS was recommended by Dow Theory Forecasts at $43.15 in Investment Digestissue 716, dated April 4, 2012. UHS closed yesterday at $38.74.
“Universal Health Services, Inc. (UHS) shares have fallen 11% since the company announced disappointing March-quarter results. Per-share profits declined 2% and missed the consensus, but that wasn’t the only worrisome development. Sales growth decelerated below 4%. Operating profit margins declined year-over-year, reversing a six-quarter upward trend. Operating cash flow fell after five quarters of improvement. And consensus profit estimates for 2012 and 2013 have begun to fall.
“Universal’s Quadrix Overall score has fallen to 88, hurt by weaker Momentum. Admittedly, the stock looks cheap relative to both its history and its peer group. But Universal could remain under pressure until its fundamentals improve. And the March quarter’s combination of weak admissions growth and poor pricing at acute-care hospitals suggests the problems won’t clear up right away. Universal Health is being dropped from the Buy List, and from coverage.”
- Richard J. Moroney, CFA, Dow Theory Forecasts, May 16, 2012