Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Help! Kindred Healthcare
So what: As of this writing, Kindred is currently the second biggest loser on the NYSE today. But why? Wasn't it only a few days ago that the hospital operator was sent soaring on the wings of an earnings beat? In fact, it was, and it did. But that was before a suddenly budget-conscious Washington proposed cutting the rate of federal reimbursement for Medicare and Medicaid services by 11%.
Now what: Analysts are reminding investors that the proposal is just that -- and not yet a law. But investors are having none of it, translating an 11% drop in revenue into similar haircuts to the stock prices at Kindred, Skilled Healthcare
I don't blame them. After all, Kindred already costs a pretty penny -- nearly 18 times earnings despite pre-reimbursement-cut growth estimates of just 10.8%. The stock was overpriced to begin with, and whether the rate cut becomes law, the shares cost too much still.
If you own Kindred, you'll want to keep close tabs on developments here. Make it easier on yourself: Add the stock to your watchlist and get updates as they happen.