Why did Canaccord Genuity Downgrade Team Health Holdings’ Stock?

By Ryan Adsit

In a report released today, Richard Close from Canaccord Genuity downgraded Team Health Holdings (NYSE: TMH) to Hold, with a price target of $43.50. The company’s shares opened today at $36.80.

Close wrote:

“We are downgrading our rating to HOLD on shares of TMH following this morning’s announcement that it has entered into an agreement to be acquired by Blackstone for $6.1B or $43.50 per share in cash. This represents an 18% premium to Friday’s close price of $36.80 and 33% from October 3, when it was first reported that TMH was in discussions with private equity investors regarding a potential transaction. The company stated it expects the deal to be finalized during 1Q’17. Key points Rating and price target. We are downgrading our rating on TMH to HOLD.”

According to TipRanks.com, Close is a 3-star analyst with an average return of 0.6% and a 36.7% success rate. Close covers the Technology sector, focusing on stocks such as Castlight Health, Evolent Health, and Athenahealth.

Currently, the analyst consensus on Team Health Holdings is Moderate Buy and the average price target is $44, representing a 19.6% upside.

In a report issued on October 26, Leerink Swann also downgraded the stock to Hold with a $43 price target.

Team Health Holdings’ market cap is currently $2.73B and has a P/E ratio of 60.33. The company has a book value ratio of 3.9415.

Based on the recent corporate insider activity of 22 insiders, corporate insider sentiment is negative on the stock. Most recently, in August 2015, David P. Jones, the Executive VP and CFO of TMH sold 30,000 shares for a total of $1,894,200.

Team Health Holdings, Inc. operates as a holding company, which provides outsourced healthcare professional staffing and administrative services to hospitals, healthcare providers and emergency departments. The company also provides comprehensive programs for hospital medicine, anesthesiology, urgent care, pediatrics and other healthcare services by providing permanent staffing. It operates through four segments: Hospital Based Services, IPC Healthcare, Specialty Services, and Other Services. The Hospital Based Services segment, which is an aggregation of emergency medicine, anesthesia, and its legacy acute care staffing services primarily within hospital settings, provides comprehensive healthcare service programs to users of healthcare services on a fee for service as well as a cost plus or contract basis. The IPC Healthcare segment consists of IPC and provides comprehensive acute hospital medicine and post-acute provider service programs to users of healthcare services. The Specialty Services segment, which is an aggregation of military and government healthcare staffing, clinical services, and nurse call center operations, provides comprehensive healthcare service programs to users of healthcare services in a non-hospital based environment. The Other Services segment is an aggregation of locums staffing, scribes, and billing, collection and consulting services that provides a range of other comprehensive healthcare services. Team Health Holdings was founded by Lynn Massingale in 1979 and is headquartered in Knoxville, TN.