UPDATE 1-Citi upgrades U.S. hospital stocks to buy

* Raises rating on HCA Holdings and six others

* Says stocks could rally on favorable healthcare reform law ruling

June 11 (Reuters) - U.S. hospital stocks could rally on the day when the Supreme Court gives its ruling on the constitutionality of President Barack Obama's healthcare reform law, Citi Investment Research & Analysis said, upgrading HCA Holdings Inc and six others to "buy."

The landmark ruling on whether to strike down all or portions of the 2010 Patient Protection and Affordable Care Act is expected later this month.

In two of the three scenarios, investors will likely benefit by 5 percent to 15 percent on the day of the ruling, the brokerage said.

However, in the unlikely event that the law is struck down, the hospital stocks could trade 5 percent to 10 percent lower, the brokerage said.

Investors could own the stocks over a six- to twelve-month period for best returns if the law is upheld, Citi said.

The reform law would extend coverage to more than 30 million uninsured people by expanding the Medicaid program for the poor and establishing regulated state insurance markets where lower income people could buy subsidized plans.

The brokerage cautioned that in the event of a Republican win in the presidential elections in November, federal funding for insurance coverage expansion would likely be withheld, erasing all the gains by the hospital stocks from a favorable court decision.

For the brokerage actions on the stocks, click: