(Reuters) - UBS started coverage of hospital operators, saying the sector was set to gain from a rebounding economy and positive employment news.
The brokerage started HCA Holdings Inc, Community Health Systems and Health Management with "buy" ratings.
It clarified that its outlook was not premised on a possible favorable verdict from the U.S. Supreme court on President Barack Obama's health reform law. The court is expected to decide on whether or not to strike down all or portions of the law later this month.
"A ruling that invalidates the law could lead to short term weakness, but might provide the greatest intermediate term clarity, given that Congress is unlikely to reconsider the issue again," UBS analyst A.J. Rice said in a note.
Rice said industry leader HCA will benefit from its strong volume gains.
"Hospitals are levered to a rebounding economy. Positive employment news would provide a positive tailwind," the analyst said.
HCA shares were up 1.6 percent at $27.59 in morning trading on Wednesday on the New York Stock Exchange.
(Reporting by Prateek Kumar in Bangalore; Editing by Sreejiraj Eluvangal)