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Investing.com - Benchmark raised its price target on Healthcare Services Group (NASDAQ:HCSG) to $24.00 from $19.00 on Thursday, while maintaining a Buy rating on the stock. The company’s shares, currently trading at $18.90, have already delivered an impressive 40.77% return year-to-date, according to InvestingPro data.
The firm cited Healthcare Services Group’s "impressive top-to-bottom beat" in its third quarter results, with revenue reaching the top of the guidance range. The company achieved 8.5% revenue growth driven by new client wins and high retention rates, while operating margins remained in line with expectations. InvestingPro analysis shows the company maintains strong financial health with a 2.49 current ratio and holds more cash than debt on its balance sheet.
For the fourth quarter, Healthcare Services Group is guiding to 6.5% revenue growth at the midpoint, which Benchmark notes reflects "appropriate caution around the timing of new business in the quarter." The firm believes the company is benefiting from sustainable macro tailwinds, including skilled nursing facility occupancy returning to pre-COVID levels and improving facility financial conditions.
Benchmark suggests Healthcare Services Group is "in the early phase of a reset of expectations and valuation" with improved visibility and revenue growth potential in the high-single-digit range, possibly reaching low-double-digits. This compares to 2026 consensus estimates of 5% growth.
The revised $24 price target implies a 2026 EV/EBITDA multiple of 12.5x, which Benchmark notes is still three turns below the comparable group, suggesting potential for multiple expansion as "the comparable valuation gap narrows."
In other recent news, Healthcare Services Group Inc. reported impressive financial results for the third quarter of 2025, surpassing analysts’ expectations. The company achieved an earnings per share (EPS) of $0.59, significantly higher than the projected $0.21, resulting in an EPS surprise of 180.95%. Revenue for the quarter reached $464.3 million, slightly above the anticipated $460.36 million, marking an 8.5% increase compared to the previous year. These results indicate strong performance and have captured the attention of investors. Additionally, the company’s stock experienced a notable surge in pre-market trading, reflecting positive market sentiment. This financial achievement underscores Healthcare Services Group’s ability to exceed market forecasts and deliver growth. These developments are part of the recent updates from the company.
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