Taking stock: Firm downgrades Community Health

Also: LP rating raised, Fifth Third and First Tennessee settle Atlanta dispute

Email | Print By Geert De Lombaerde

03-26-2008 3:30 PM — A New Jersey research shop has downgraded shares of Community Health Systems from ‘buy’ to ‘hold,’ saying the hospital company’s debt limits its strategic options.

Atlantis Research said Community Health’s leverage – at year-end 2007, the company’s long-term debt stood at $9.1 billion, more than five times its shareholder equity – means it can’t commit to a sizable share buyback or acquisition in the near future. Atlantis’ analysts also said CHS’ accounts receivable levels are higher than those of its publicly traded peers.

Shares of CHS (Ticker: CYH) closed trading today at $31.65, down 0.3 percent on the day. They’re off about 14 percent year to date.

S&P: LP at a bottom

On the flip side, the beaten-down shares of Louisiana-Pacific “are due for a rebound,” says S&P Equity Research Stuart Benway.

Benway, who says LP’s construction clients will likely struggle well into 2009, has lifted his loss estimate for this year from 90 cents to $1.30 per share. But, he adds, the worst of the housing crunch is behind us and LP “has the financial strength to endure through this extended downturn.”

Not many investors shared Benway’s view today: Shares of LP (Ticker: LPX) ended trading down 3 percent at $9.39. They have fallen steadily from almost $19 since the beginning of the year. Benway has a $13 target for the stock.

Banks iron out Atlanta branch deal

The parent companies of First Tennessee and Fifth Third, Middle Tennessee’s fifth- and sixth-largest banks, have settled their dispute over nine Atlanta offices First Tennessee is selling.

The fight was due to go to trial in Nashville this spring, but legal proceedings will be dismissed when the deal closes. For more on the deal, click here.