In a report released yesterday, Joanna Gajuk from Bank of America Securities reiterated a Buy rating on Tenet Healthcare (THC – Research Report), with a price target of $165.00.
Joanna Gajuk’s rating is based on several compelling factors that highlight Tenet Healthcare’s strong financial and operational performance. Despite a significant first-quarter EBITDA that exceeded expectations by 16%, the company maintained its full-year guidance, which suggests a conservative approach. This conservatism is seen as a positive indicator of potential future outperformance, especially if current trends continue. The hospital segment demonstrated impressive cost control, contributing to robust margins, while the ambulatory segment benefited from increased acuity, supporting revenue growth.
Moreover, Tenet Healthcare’s strong free cash flow positions the company to strategically expand its ambulatory surgery centers (ASCs), which offer faster growth and higher returns on invested capital. The hospital segment also showed strong margin performance, with pricing increases outpacing cost growth and improvements in labor costs. Additionally, the company’s leverage and free cash flow allow for significant capital deployment, including stock buybacks and ASC expansion, which are seen as attractive given the current valuation and positive outlook.
In another report released today, Barclays also maintained a Buy rating on the stock with a $171.00 price target.
THC’s price has also changed moderately for the past six months – from $162.760 to $138.350, which is a -15.00% drop .