Citi Rates Universal Health Services (UHS) A Buy

Citi Investment Research & Analysis analyst Gary Taylor reiterated his Buy rating for shares of Universal Health Services, Inc (NYSE: UHS), with a price target of $47 per share.

Taylor said that his newco model for Universal Health Services, Inc / Psychiatric Solutions, Inc. (Nasdaq: PSYS) suggested that the company should have 23% EPS accretion by 2012.

The Citi Investment Research & Analysis analyst wrote, "our proforma consolidation model (herein) adds our previously published eps estimates for UHS and PSYS, subtracts $30m synergies in 2011 + an additional $10m in 2012 (vs our original est of $50m redundant corp OH). We assume a 7.5% blended cost of debt (50bp higher than mngt estimates). We have assumed no additional revenue or margin improvements from UHS operating initiatives (although we believe such opportunities exist). On the other hand, we have assumed no forced divestitures (which we expect to be minimal)."