BofA raised its price target on shares of Universal Health Services amid positive fundamental performance, according to Investing.com
On Friday, BofA Securities revised its outlook Global Health Services (NYSE:) shares, raising their price target to $235 from $225 while maintaining a buy rating on the stock.
This revision follows a recent guidance update for Universal Health Services, which indicated a significant remaining contribution from additional payments and core business operations. The company kept its volume and price forecast unchanged for the second half of the year.
A BofA Securities analyst emphasized that the guidance does not include potential new payments pending approval in Tennessee and the District of Columbia.
Tennessee's extra payments for behavioral services could reach $52-$56 million annually and could be applied retroactively starting July 1. In the District of Columbia, both critical and behavioral services could see an increase of $80-90 million, with a retroactive request from October. 1.
The report also noted that other states are considering implementing similar supplemental payment programs. The expected benefits from these initiatives could lead to a 6% increase in EBITDA for Global Health Services.
As a result, BofA Securities adjusted its price target to $235, indicating an 8.8x multiple to the company's projected 2025 EBITDA, up from a previous multiple of 8.5x.
The analyst's comments underscore the important role that surcharges play in the company's financial outlook and the potential for further upside if pending approvals materialize.
Global Health Services' forecast of high volumes and prices in the last half of the year provides a stable background for the expected benefits from the new premiums.
In other recent news, Nestle SA (SIX:) faces a stock downgrade from UBS due to continued pricing pressure and missing organic sales growth targets. This comes after the company's latest quarterly report showed just a 3% increase in its key growth drivers, a stark contrast to the average growth rate of 6.5% over the past six years. Furthermore, only 56% of Nestle's top brands maintain or gain market share amid intense competition.
In particular, Universal Health Services has seen several improvements and corrections to the stock's ratings and price targets. Cantor Fitzgerald, Baird, and UBS all upgraded the company's stock, citing the potential for significant earnings growth. In addition, RBC Capital and TD Cowen adjusted their target prices in response to the company's strong first-quarter performance in 2024.
Universal Health Services also announced that it has paid a dividend of $0.20 per share, scheduled to be issued in June, demonstrating its commitment to delivering value to shareholders. Meanwhile, Oscar Health, a healthcare technology company, reported a significant beat in both earnings and revenue for Q1 2024. These are among the latest developments that provide investors with updated views on the financial performance and growth potential of these companies.
InvestingPro Insights
Universal Health Services (NYSE:UHS) appears to be in a strong financial position, with a market capitalization of $13.72 billion and a strong price-to-earnings (P/E) ratio of 14.96, which is even more attractive considering the adjusted P. /E for the last twelve months from Q2 2024 is 14.78. The company's revenue growth has been strong, posting an increase of 8.83% over the past twelve months from Q2 2024, with a significant quarterly growth rate of 10.13%. This financial health is supported by a remarkable gross profit of 41.09%, which shows the efficiency of the company in managing its operations.
InvestingPro Tip highlights that Universal Health Services has a Piotroski Score of 9, indicating strong financial health and stability. Additionally, management's aggressive share buying may reflect confidence in the company's future prospects, a sentiment echoed by the five analysts who revised their earnings upward in the future. For investors interested in more detailed analysis and additional InvestingPro tips, there are 12 more tips available for Universal Health Services at Investing.com/pro/UHS. Use the coupon code PRONEWS24 for up to 10% off annual Pro and annual or bi-annual Pro+ subscriptions.
The company's commitment to shareholder returns is evidenced by its history of maintaining dividend payments for 22 consecutive years. Furthermore, with the stock trading near its 52-week high and showing strong returns over the past three months, investors may find Universal Health Services an attractive option within the Healthcare Providers & Services industry.
This article was created with the support of AI and reviewed by an editor. For more information see our T&C.
