UPDATE: Morgan Stanley Initiates HCA Holdings at Overweight (HCA)

Morgan Stanley is out with its report today on HCA Holdings (NYSE: HCA), initiating HCA at Overweight.

In a note to clients, Morgan Stanley writes, "HCA is the largest U.S. hospital operator with a geographically diverse footprint, proven track record of success, and well-tenured management team. We see roughly 20% upside to shares on solid execution driving 4%-5% annual top-line and EBITDA growth with incremental upside possible from potential tuck-in acquisitions (in line with HCA's acquisition strategy). Our $38 price target is based on ~6.8x 2012E EBITDA vs. peers at 6.1x, a ~10% premium relative to the group reflecting HCA's leading market position, industry-leading EBITDA margins (~19% vs. peers at ~14%), and strong free cash flows (~9% FCF yield)."

At the time of posting, shares of HCA were trading pre-market at $32.84, up 2.37% from Monday's close.