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Investing.com - BofA Securities downgraded Ardent Health Partners Inc (NYSE:ARDT) from Neutral to Underperform on Wednesday, while lowering its price target to $14.60 from $15.50. Currently trading at $13.92, the stock appears undervalued according to InvestingPro’s Fair Value model, despite showing a -18.5% YTD return.
The downgrade reflects BofA’s concerns about increasing headwinds from cuts to Medicaid and Accountable Care Act (ACA) exchanges within the recently passed Reconciliation Bill, which the firm believes will lower volume growth and increase bad debt for the healthcare provider. InvestingPro data shows that 3 analysts have recently revised their earnings downward for the upcoming period, while the company maintains strong fundamentals with a current ratio of 2.12.
BofA Securities noted that Ardent Health Partners has the highest exposure to headwinds in future years from cuts to Medicaid State Directed Payments (SDPs) compared to industry peers.
The investment bank’s new price target of $14.60 is based on 5.0x 2026E EBITDAR, reduced from the previous valuation of 5.4x 2025E EBITDAR, reflecting these anticipated challenges.
BofA further warned that the passage of significant cuts to Medicaid and exchanges in the Reconciliation Bill makes it increasingly likely that enhanced exchange subsidies will also expire, creating an additional headwind for Ardent Health Partners into 2026.
In other recent news, Ardent Health Partners reported a 4% increase in revenue for the first quarter of 2025, reaching $1.5 billion. The company’s adjusted EBITDA was noted at $98 million, surpassing market expectations by $2 million. In light of these financial results, Loop Capital Markets adjusted its price target for Ardent Health to $19.00, maintaining a Buy rating. The healthcare provider also announced the strategic acquisition of 18 NextCare Urgent Care clinics, further expanding its footprint in key markets.
Additionally, Ardent Health Partners is set to undergo a corporate rebranding, changing its legal name to Ardent Health, Inc., effective June 3, 2025. This initiative aims to unify the company’s brand identity and enhance clarity in its communications. The company also appointed Chris Schoeplein as its new Chief Development Officer, focusing on growth initiatives such as acquisitions and partnerships.
KeyBanc reiterated an Overweight rating on Ardent Health, expressing optimism about potential legislative changes that could benefit the company, particularly regarding Medicaid provider taxes and State Directed Payment programs. Ardent Health’s management remains confident in the renewal of New Mexico’s State Directed Payment program for 2025, which could further bolster the company’s financial outlook.
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