< The 2015 All-America Research Team

Total appearances: 15

Analyst debut: 1995

Last year UBS researcher A.J. Rice held the No. 2 position on the Health Care Facilities roster and merited a runner-up showing on the Managed Care lineup. Coverage of those sectors is now merged, and Rice retains second place, raising to 15 his total number of appearances across both groups. “A.J.’s knowledge and experience in the hospital industry spans multiple decades,” one fan observes. “His ability to know the current fundamental environment while putting it into context of his long historical experience is valuable to investors.” Both subsectors of this wider group have been outperforming this year, Rice observes. “The much-anticipated Supreme Court decision on King v. Burwell was a significant positive for the hospital group, allowing the benefits of health [care] reform for the sector to continue to develop over the next few years,” he says. “Core operating fundamentals for the hospital group are strong, aided by a rebounding jobs and consumer confidence backdrop. We see the potential for positive earnings surprises to continue and for a further positive revaluation of the shares in the group.” Within the health care facilities industry, he recommends that clients prefer short-term, acute-care hospitals. Managed care companies’ performance, meanwhile, has been driven primarily by consolidation-related developments and a still-strong operating earnings trajectory, notes Rice, 57. “Three deals have been announced thus far, and despite investors’ stated appetite for large-scale M&A in the space, market reactions to the transaction announcements have been lukewarm, due to concerns about potential antitrust scrutiny,” he reports. Regarding specific stocks, the analyst remains bullish on long-standing favorite HCA Holdings, a Nashville, Tennessee–headquartered operator of acute care hospitals and outpatient services centers. Given the provider’s exposure to the positive benefits of national health care reform, expectations for HCA are conservative for 2015 and beyond, he believes, and “we like the fact that the company uses it cash flow to actively buy its stock.” The shares closed at $82.48 in mid-September, up 14 percent during the trailing 12-month period, compared with the broad market’s decline of 2.6 percent. Rice maintains a price of $106. “A.J. is very plugged in with the management teams in his coverage,” another backer remarks. “He also hosts very targeted conference calls and is incredibly responsive.”