On Friday, an analyst from TD (TSX:TD) Cowen adjusted the financial outlook for Universal Health Services (NYSE:UHS), raising the stock price target to $220 from the previous figure of $183. The firm maintained a Hold rating on the stock despite the increase in the price target.
Universal Health Services reported a robust quarter, with notable increases in its Acute EBITDA by 3% and its Psych segment by 18% over the consensus. Moreover, the company's revenue guidance experienced an upward revision of 1%, while the EBITDA guidance saw a significant 11% increase.
The analyst highlighted the potential for new Service Delivery Programs (SDP) in Tennessee and Washington D.C., which could contribute more than $120 million annually to the company's revenue, should they receive approval. These new programs are a key driver behind the improved financial forecast for Universal Health Services.
Incorporating these positive developments, TD Cowen is now incorporating an approximate 10 basis points of margin improvement into its financial model for the company through to the year 2025. This adjustment is a reflection of the strong performance and promising prospects identified by the analyst.
The new price target of $220 is set at approximately 8.0 times the TD Cowen's 2025 adjusted EBITDA estimate for Universal Health Services. This valuation aligns with the company's 10-year average, suggesting a consistent approach to the stock's projected value.
In other recent news, Universal Health Services (UHS) has been the subject of various analyst upgrades and price target revisions. BofA Securities raised its price target for UHS shares to $235, maintaining a Buy rating, following a positive guidance update from the company.
The firm noted potential additional supplemental payments pending approval in Tennessee and the District of Columbia, which could significantly boost the company's financial outlook.
On a similar note, Cantor Fitzgerald upgraded UHS's stock from Underweight to Neutral, lifting its price target to $219, citing optimism about the company's acute care segment. Baird also upgraded UHS's stock from Neutral to Outperform, raising its price target to $236, reflecting the company's potential for significant earnings growth.
UBS upgraded UHS's stock from Neutral to Buy, raising the price target to $226. The upgrade reflects a positive outlook on the company's earnings potential, particularly in its behavioral health services. UHS also declared a cash dividend of $0.20 per share, scheduled for disbursement in June.
Conversely, UBS downgraded Nestle SA (SIX:NESN)'s stock from Buy to Neutral due to persistent pricing pressures and missed organic sales growth targets. The firm set a new price target of CHF95.00, a decrease from the previous CHF117.00, following Nestle's latest quarterly report. These are among the recent developments that provide investors with updated perspectives on the financial performance and growth potential of these companies.
InvestingPro Insights
Following the upbeat financial outlook from TD Cowen for Universal Health Services (NYSE:UHS), real-time data from InvestingPro further underscores the company's robust financial health and market position. With a market capitalization of $14.03 billion and a P/E ratio standing at 14.96, UHS is trading at a low P/E ratio relative to near-term earnings growth. This is a key indicator of the stock's potential undervaluation, especially considering the company's strong revenue growth of 8.83% over the last twelve months as of Q2 2024.
InvestingPro Tips highlight UHS's aggressive share buyback strategy and a perfect Piotroski Score of 9, demonstrating strong financial health and prudent management decisions. Additionally, the stock has seen a significant return over the last week with a 13.37% price total return, which may catch the eye of investors looking for short-term gains. For those considering a deeper analysis, InvestingPro offers additional tips on UHS, providing a comprehensive understanding of the stock's outlook.
Investors interested in further insights can leverage the exclusive InvestingPro platform and apply the coupon code PRONEWS24 to receive up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With additional tips available on InvestingPro, including the latest analyst revisions and stock volatility data, investors can make more informed decisions backed by comprehensive and real-time market data.
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