On Monday, TD Cowen adjusted its price target for Universal Health Services (NYSE: NYSE:UHS), setting it at $275.00, down from the previous target of $283.00. Despite this change, the firm maintains a Buy rating on the stock.
Following the third-quarter financial results of 2024, the analyst at TD Cowen updated their model for UHS, noting that the company's performance slightly exceeded consensus expectations with total revenues and adjusted EBITDA increasing by 1.5% and 1.4%, respectively.
The hospital and healthcare services company saw a significant divergence in its business segments, with the Acute EBITDA outperforming expectations by 12.4%. However, the Behavioral segment did not meet investor expectations, falling short by 8.7%. Despite the mixed results, the analyst emphasized that the third-quarter outcomes do not alter their Strategic Development Plan (SDP) thesis, which supported the recent upgrade of UHS's stock.
The revision of the price target to $275 from $283 by TD Cowen reflects a slight modification in response to the latest earnings report. The analyst's commentary suggests that while there were some disappointments, particularly in the Behavioral segment, the overall positive results in Acute EBITDA and the adherence to the SDP thesis justify maintaining a positive outlook on the stock.
Investors had high expectations ahead of the third-quarter earnings release, and while the report presented a mixed picture, the firm's long-term perspective on Universal Health Services remains unchanged. The Buy rating suggests that TD Cowen continues to see value in the company's shares despite the recent adjustment in the price target.
In other recent news, Universal Health Services (UHS) has disclosed its third-quarter 2024 financial results, reporting a net income of $3.80 per diluted share and an adjusted net income of $3.71 per share.
The company also experienced an 8.6% revenue growth, excluding its insurance subsidiary, partially driven by a slight increase in acute care volumes. Analysts from firms such as Cantor Fitzgerald, RBC Capital Markets, and Deutsche Bank (ETR:DBKGn) have adjusted their price targets for UHS, with Cantor Fitzgerald raising it to $227, RBC Capital Markets reducing it to $211, and Deutsche Bank maintaining a steadfast target of $240.
These changes come in light of recent developments such as UHS's strategic investments and operational improvements, including upcoming facility openings in Las Vegas, D.C., and Florida. The company projects a 6% to 7% revenue growth in acute care and mid-to-upper single-digit revenue growth in the behavioral health segment in 2025.
These recent developments underscore UHS's commitment to growth in the healthcare sector. Analysts from RBC Capital and Deutsche Bank have provided their insights, indicating that the stock might not outperform the market, but it is not expected to significantly underperform either.
InvestingPro Insights
Universal Health Services' recent performance aligns with several key metrics and insights from InvestingPro. The company's P/E ratio of 13.49 and adjusted P/E ratio of 13.13 for the last twelve months as of Q3 2024 suggest that UHS is trading at a relatively low valuation compared to its earnings. This is further supported by an InvestingPro Tip indicating that UHS is "Trading at a low P/E ratio relative to near-term earnings growth."
The company's financial health appears robust, with revenue growth of 9.93% over the last twelve months and a strong EBITDA growth of 22.49% during the same period. These figures complement the analyst's observation of increased total revenues and adjusted EBITDA in the third quarter.
InvestingPro Tips also highlight that UHS "Has maintained dividend payments for 22 consecutive years" and has a "High shareholder yield," which may appeal to income-focused investors. Additionally, the company's "perfect Piotroski Score of 9" suggests strong financial stability and performance across various metrics.
For readers interested in a more comprehensive analysis, InvestingPro offers 11 additional tips for UHS, providing a deeper understanding of the company's financial position and market performance.
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