On Monday, BofA Securities made a bullish move on NYSE:USPH, upgrading U.S. Physical Therapy from Neutral to Buy. The firm also increased the stock's price target to $115 from $100.
The upgrade comes as the analyst sees the company on a path to recovery following recent labor challenges. U.S. Physical Therapy is also actively pursuing acquisitions, a key component of its growth strategy. These acquisitions, along with organic growth, are expected to contribute to the company's performance.
The analyst highlighted that U.S. Physical Therapy's growth is supported by a combination of 4-5% organic growth and strategic acquisitions and openings of new locations (denovos). This approach has historically been integral to the company's expansion. The firm's renewed focus on acquisitions is seen as a positive driver for future growth.
In addition, the analyst noted that U.S. Physical Therapy is comparatively shielded from the postelection uncertainty that may affect hospitals in 2025. This relative insulation is viewed as a stabilizing factor for the company's outlook.
The price objective was raised based on a higher earnings multiple, with the new target reflecting a 15.3x multiple on the company's projected 2025 adjusted EBITDAR, an increase from the previous 13.8x multiple. This adjustment signifies a greater confidence in the company's financial projections and its ability to meet those estimates.
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