J.P. Morgan Updating Estimates On Health South (HLS)

J.P.Morgan Chase & Co. is updating its earnings estimates on HEALTHSOUTH Corp. HLS to include 2012 estimates. It rates the company at Neutral, and has a $20 price target on the company. In the research report, J.P.Morgan Chase & Co. writes, "Our estimates do not include the impact of the company’s recent commentary on its capital structure priorities. Here the company is looking to increase its financial flexibility while also reducing its refinancing risks, and to allow for debt repayment with excess cash flow and loosen some of its restrictive covenants which were put in place with the 2006 restructuring. More specifically, HLS is looking to extend the maturity of the $400mm revolver to 2014 or beyond (currently matures in March 2012), refinance the $450mm term loan due March 2013, and opportunistically retire/refinance the $290 mm term loan due March 2015 as well as the $500mm of 10.75% senior notes due 2016. Here the 2016 notes are currently callable in June 2011 at 105 3/8." Shares of HEALTHSOUTH Corp. lost 11 cents yesterday to close at $16.83.