Oppenheimer Has $51 Target On Community Health Systems

Oppenheimer & Co. has a $51 price target and an Outperform rating on Community Health Systems, Inc. CYH. In a note sent to investors Oppenheimer writes, "Community Health Systems announced that Dallas-based Tenet Healthcare has declined its offer for $6/share ($5 cash, $1 in stock), which represents a ~40% premium to THC's closing price of $4.29. The total offer amounted to $7.3B (including $4B net debt). However, Tenet declined the offer citing that the terms of the deal were inadequate for shareholders. The deal equates to about 6x '11 EBITDA (Street consensus estimate) well below the forward multiples paid for HCA's LBO (7.8x) and Triad (8.4x). Despite the relatively attractive price tag, we believe this deal would be a little risky for CYH, who would have more than $15B in debt (5x EBITDA) and ~1.5% net margins." Shares of CYH are down sharply in pre-market, losing $1.84 to $29.80, a loss of 5.8%.