On Tuesday, TD Cowen adjusted its outlook on HCA Holdings (NYSE: NYSE:HCA), reducing the price target to $360 from the previous $371, while still endorsing the stock with a Buy rating. The revision follows HCA's first-quarter results for 2024, which, although solid, fell short of TD Cowen's expectations for EBITDA by $87 million.
The firm has updated its projections for HCA's EBITDA in the years 2024 and 2025 to $13.344 billion and $14.450 billion, respectively. These figures are slightly down from the previous estimates of $13.406 billion and $14.454 billion. The modification in the forecast accounts for the first-quarter performance and a perceived softening in the trend environment.
In addition to EBITDA revisions, TD Cowen has also refreshed its year-end 2024 balance sheet projections for HCA. Furthermore, the firm has altered its 2025 enterprise value to EBITDA minus net corporate income (EV/EBITDA-NCI) target multiple to 9.8 times, a decrease from the earlier multiple of 10 times. This change in the valuation metric contributed to the lowering of the price target.
The analyst from TD Cowen stated, "HCA's solid 1Q24 results nevertheless missed our EBITDA by $87m; we incorporate this miss and our view of a softening trend environment into revised 2024/25 EBITDA of $13.344/$14.450b from prior $13.406/$14.454b. We also update our 2024YE balance sheet projections and 2025 EV/EBITDA-NCI target multiple to 9.8x from 10x reducing our target from $371 to $360."
The updated price target of $360 suggests that TD Cowen continues to see value in HCA Holdings shares despite the adjustments made to their financial projections. The Buy rating indicates the firm's ongoing confidence in the stock's potential performance.
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