The Hot Stock: HCA Jumps 5.2%

HCA(HCA) soared to the top of the S&P 500 today after the failure of the Republican health-care bill boosted shares of hospital stocks. HCA was also upgraded to Buy from Neutral at Mizuho.

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HCAgained 5.2% $90.49, while the S&P 500 fell 0.1% to 2,341.59.

Credit Suisse analyst Scott Fidel and team explains why the failure of the Republican health-care bill is good news for hospital stocks:

The AHCA collapse will create a near-term sense of relief for Hospital and Medicaid MCO stocks, which had the most to lose from the legislation. Conversely, the failure of AHCA will create some increased concern around the Diversified MCOs, as the bill repealed the health insurance industry tax and made policy changes that could have been helpful to the individual market. However, we also find it hard to imagine that the GOP will now look to drive a pro-ObamaCare agenda as it relates to health policy. We see particular uncertainty around what will happen with the ACA exchanges (and the broader individual market) in 2017 and 2018. Bottom line: the outlook for transformative legislation on health care is now significantly reduced as a result of the AHCA failure. We instead expect to see attempts at incremental changes to ObamaCare instead. However, we do not yet have a line of sight into how these potential changes may unfold, in the direct aftermath of [the]AHCA collapse.

HCA’s market capitalization rose to $33.52 billion from $31.9 billion on Friday. It reported net income of $2.9 billion on sales of $41.5 billion in 2016.

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