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Investing.com - Benchmark raised its price target on Healthcare Services Group (NASDAQ:HCSG) to $19.00 from $17.00 on Thursday, while maintaining a Buy rating on the stock. This aligns with InvestingPro’s analysis, which indicates the stock is currently undervalued, despite trading at a P/E ratio of 91.8x.
The price target increase follows Healthcare Services Group’s second-quarter results, which showed in-line adjusted earnings per share on better-than-expected revenue. The company also updated its full-year cash flow outlook to $70 million-$85 million, up from the previous guidance of $60 million-$75 million. According to InvestingPro data, the company maintains strong financial health with a current ratio of 2.49 and more cash than debt on its balance sheet.
Healthcare Services Group announced a $50 million 12-month share repurchase plan and is experiencing accelerating contract growth with high client retention. Revenue growth is currently running slightly ahead of management’s prior full-year mid-single digit growth guidance.
Benchmark noted several positive drivers for the company, including supportive skilled nursing facility trends with occupancy near pre-COVID levels, positive Medicare/Medicaid rate updates, and moderate wage pressures. Management reported satisfaction with current client credit quality.
The Genesis restructure, which includes 164 facilities with Healthcare Services Group, resulted in a non-charge of $0.62 per share in the second quarter and an expected $0.04 impact in the third quarter, but Benchmark indicated this removes an overhang on the stock and will not impact service levels or payments. InvestingPro subscribers can access detailed financial health scores and 8 additional ProTips to better understand the company’s long-term potential.
In other recent news, Healthcare Services Group (HCSG) reported its financial results for the second quarter of 2025, revealing a mixed performance. The company experienced a net loss of $32.4 million, resulting in an earnings per share (EPS) of -$0.44, which fell short of the anticipated EPS of $0.20. However, Healthcare Services Group exceeded revenue expectations, achieving $458.5 million, a 1.71% increase over forecasts. These developments highlight the contrasting aspects of the company’s recent financial performance. Despite the earnings miss, the revenue beat might suggest underlying strengths in the company’s operations. There have been no recent reports of mergers or acquisitions involving Healthcare Services Group. Analyst opinions on the stock have not been updated recently, leaving investors to assess the current data independently. These recent developments provide a snapshot of Healthcare Services Group’s financial health and market position.
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