Goldman Sachs lifts Tenet Healthcare target to $154, keeps neutral stance

On Monday, Goldman Sachs updated its outlook on Tenet Healthcare Corporation (NYSE:THC), raising the price target to $154 from the previous $134 while maintaining a Neutral rating on the stock. The adjustment follows Tenet’s recent performance, which saw its shares surge by 11.6%, outpacing the S&P 500’s modest 0.6% gain.

The firm’s analysts highlighted Tenet’s robust fundamentals and the reaffirmation of its financial guidance as key factors in the stock’s outperformance. Tenet’s Ambulatory Surgery Center (ASC) segment has seen growth in patient acuity, and its Hospital segment has effectively controlled costs, contributing to the positive results in both divisions. The company’s financial health score is rated as GREAT by InvestingPro, with strong profitability metrics including a 40.4% gross margin and an attractive P/E ratio of 9.7x.

Looking ahead, the movement of healthcare services to ASC settings is expected to provide a structural tailwind for Tenet. The company’s market positioning is likely to support sustained strong performance. In the Hospital segment, Tenet’s cost management strategies are anticipated to further drive margin expansion. InvestingPro analysis suggests the stock is currently undervalued, with multiple ProTips highlighting management’s aggressive share buybacks and strong recent performance metrics.

Goldman Sachs noted that the fundamentals of Tenet’s business remain solid. However, the firm also acknowledged that policy outcomes under the current administration could pose significant risks to Tenet and the healthcare industry at large, which is reflected in the maintained Neutral rating.

The revised price target of $154 incorporates several factors: higher estimates, improved multiples observed across peer companies, and the extension of projections from Q5 to Q8. These elements collectively informed Goldman Sachs’ updated valuation of Tenet Healthcare’s stock.

In other recent news, Tenet Healthcare reported impressive financial results for the first quarter of 2025, exceeding Wall Street’s expectations. The company posted earnings per share of $4.36, significantly higher than the anticipated $3.17, while revenue reached $5.22 billion, surpassing the forecasted $5.14 billion. Tenet also reaffirmed its full-year 2025 guidance, projecting free cash flow between $1.8 billion and $2.05 billion. In addition to these strong financials, Tenet repurchased 2.6 million shares for $348 million during the quarter. Analysts at Cantor Fitzgerald maintained an Overweight rating on Tenet Healthcare, with a price target of $177, citing the company’s solid financial guidance as a key factor. The analysts noted that despite political uncertainties, Tenet’s clear guidance provides a safety net and potential for growth. Tenet’s strategic focus on expanding ambulatory surgery centers and improving operational efficiency was highlighted as a driver of its robust performance. These developments underscore Tenet Healthcare’s strong position in the market amid broader economic challenges.

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