Auriga Starts Universal Health Services (UHS) at Buy

Auriga initiates coverage on Universal Health Services (NYSE: UHS) with a Buy. PT $45.00.

The firm states, "Our buy rating is based on: 1) benefit from a diversified business model (acute, behavioral); 2) improving profitability from its market share in TX and NV; 3) incremental benefits from the Psychiatric Solutions acquisition; and 4) overall solid behavioral business trends. These long-term profitability drivers combined with current attractive valuation overshadow any short-term risk associated with potential weakness in economic activity. We derive our price target by applying a P/E multiple of 10.5x to our below consensus 2012 EPS estimate of $4.30. We believe our estimates are conservative; we project bad debts may increase in 2H11--2012 due to a weak economy."

For more ratings news on Universal Health Services click here and for the rating history of Universal Health Services click here.

Shares of Universal Health Services closed at $36.91 yesterday.

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