Universal Health Services, Inc. (NYSE: UHS) caught the market’s attention on Thursday after it lowered its projections for 2022 and provided an insight into its second-quarter operating results.
Protect Your Portfolio Against Market Uncertainty
- Discover companies with rock-solid fundamentals in TipRanks' Smart Value Newsletter.
- Receive undervalued stocks, resilient to market uncertainty, delivered straight to your inbox.
Shares of this $7.2-billion company, with an expertise in providing healthcare management solutions, declined 6.1% on Thursday. The closing price of the stock was $100.71.
Inside the Headlines
In the acute care hospitals, the company noted that Covid-19 patient volumes were low in April and May 2022, compared with the previous quarter. Also, the business from non-Covid-19 patients failed to offset the headwinds from low Covid-19 patient volumes. Interestingly, the lower patient volumes had eased the company’s labor issues (shortages of nurses and other medical help) to some extent.
Also, the company noted that business in its behavioral health care facilities was weak in April and May. Overall, the company predicts adjusted earnings to be within the $2.05-$2.15 per share range for the second quarter of 2022. The guidance seems weaker than the adjusted earnings of $2.15 per share recorded in the first quarter of 2022.
For 2022, the company believes that concerns related to patient volumes (Covid-19 related), staffing shortages, and high costs will impact its performance. It now forecasts revenues of $13.235-$13.371 billion in 2022, lower than the $13.424-$13.694 billion predicted earlier.
The adjusted earnings before interest, tax, depreciation and amortization (EBITDA) are forecast to be $1.635-$1.712 billion versus the earlier expectation of $1.83-$1.927 billion.
Adjusted earnings per share in the year are forecast to be $9.60-$10.40 per share, lower than the $11.90-$12.90 per share stated previously.
Stock Rating
On TipRanks, the company has a Hold consensus rating based on two Buys, six Holds, and four Sells. UHS’ average price forecast of $128.92 suggests upside potential of 28.01% from the current levels. Over the past year, shares of UHS have declined 32.6%.
Risk Analysis
Conclusion
From the revised projections, it is evident that Universal Health is facing headwinds from uncertainties related to Covid-19 patient volumes and staffing issues at its healthcare facilities. As of now, a wait-and-watch strategy is expected to be beneficial for investors interested in UHS stock.
Read full Disclosure