by Walker Duncan, Nashville Business Journal | Feb 02, 2012

NASHVILLE – The Nashville Health Care Council on Wednesday convened a panel of top Wall Street analysts to give their outlook for the coming year.

The general outlook, based on the recap available here, is guardedly neutral to slightly positive for various corners of the health care sector.

The analysts at the event were Adam Feinstein of Barclays Capital, Frank Morgan with RBC Capital Markets, Whit Mayo of Robert W. Baird, A.J. Rice of Susquehanna Financial and Darren Lehrich of Deutsche Bank Securities. They spoke to a sell-out crowd of more than 600 health care players and observers at the event held in the Nashville Convention Center.

In the recap, Feinstein predicted the health care facilities space will likely be “a lot calmer this year,” citing the slim possibility of major policy changes in an election year. During the last year, many hospital stocks have been battered as continued budget squabbling in Washington has trickled down to the markets. And while HCA’s reemergence on the public markets had been expected to have a palliative effect on the space, that company’s shares have taken roughly as much heat as any, spending a significant part of last year below $22 after debuting just above $30.

Feinstein did also say that the mergers and acquisition markets will likely be much more active over the next several years.

Lehrich echoed the guarded sentiment, saying that Deutsche Bank is advising investors to remain neutral despite the near term view that things are beginning to look up for hospitals.

Baird’s Mayo noted that the home health space will likely face challenges due to rate cuts and a need to prove its value proposition.And Morgan pointed the lens at the post-acute care space, noting that while volumes will likely remain strong, the space is exposed to reimbursement issues as budget continue to plague reimbursement polices in Washington.

Susquehanna’s Rice said that the fallout from a rocky 2011 will likely continue and that investors should expect “more of the same” in the hospital space. But he also said there are possibilities for positive surprises. If those come to pass, his firm likes established players like Community Health Systems, LifePoint and HCA.Today’s subdued optimism follows last year’s panel’s largely bullish outlook, which proved to be overly optimistic.