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Tuesday, Universal Health Services Inc. (NYSE:UHS), currently trading at $172.91, maintained its Neutral rating and $227.00 price target from Cantor Fitzgerald. According to InvestingPro data, the company appears undervalued based on its Fair Value analysis, with 8 analysts recently revising their earnings estimates upward. The firm’s analyst commented on recent performance issues, noting that first-quarter behavioral volumes were more significantly impacted by weather conditions than initially expected. The reported behavioral volumes showed a decrease of 1.6%, which was 410 basis points below the consensus and also below the company’s annual low-end guidance of 2.5-3%. Despite these challenges, UHS maintains strong fundamentals with a 10.82% revenue growth and an impressive overall financial health score rated as "GREAT" by InvestingPro. Moreover, adjusted patient days only saw a marginal increase of 0.3%, compared to the consensus expectation of 2.7%.
The analyst pointed out that the quarter was further challenged by a 100 basis points headwind due to the non-repeat of last year’s leap year. The market’s response to this performance could hinge on Universal Health Services’ upcoming announcement, scheduled for tomorrow, regarding whether the company will maintain its full-year 2025 volume guidance of 2.5-3%.
The impact of the weather, particularly due to an unusually harsh cold front in the southeast, has been significant. However, there is an anticipation that if these conditions were the sole cause of the downturn, a rapid recovery in volumes could be expected. The firm’s position will likely be influenced by the company’s confidence in meeting its yearly targets despite the setback experienced in the first quarter.
Investors and analysts alike are looking forward to Universal Health Services’ forthcoming statement to gauge the company’s outlook for the rest of the year. The announcement could provide clarity on whether the first-quarter results are a temporary blip or indicative of a more sustained trend. For deeper insights into UHS’s valuation and growth prospects, including 10 key ProTips and comprehensive financial analysis, investors can access the detailed Pro Research Report available on InvestingPro.
In other recent news, Universal Health Services reported first-quarter earnings for 2025 that exceeded expectations, with adjusted earnings per share reaching $4.80, surpassing the analyst consensus of $4.36. However, the company reported revenue of $4.1 billion, which fell short of the anticipated $4.16 billion. The adjusted EBITDA less non-controlling interest was $598 million, a 13.8% increase from the previous year, exceeding both Wells Fargo (NYSE:WFC)’s and consensus estimates. The acute care segment saw a 7.5% year-over-year revenue increase to $2.35 billion, although it did not meet the expected $2.37 billion. In the behavioral health division, revenue grew by 5.5% to $1.75 billion, slightly below estimates. Wells Fargo maintained its Overweight rating on Universal Health Services, with a consistent price target of $225. The firm noted improvements in EBITDA margins and reductions in salary, wages, and supply costs as positive developments. The company repurchased approximately 1 million shares at a cost of $180.6 million during the quarter. Universal Health Services did not provide specific guidance for the full year 2025.
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