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Investing.com - Macquarie upgraded Healthcare Services Group (NASDAQ:HCSG) from Neutral to Outperform on Monday, while raising its price target to $16.00 from $15.00. The company, currently trading at $13.49 with a market capitalization of $976 million, has shown resilient performance with 5.17% revenue growth over the last twelve months. According to InvestingPro analysis, the stock appears slightly undervalued at current levels.
The upgrade reflects Macquarie’s positive outlook on the company’s growth momentum, stable industry fundamentals, and enhanced capital return potential.
Macquarie believes the company’s accelerating growth trend is sustainable, noting that Healthcare Services Group has executed well on sales and customer retention despite challenges related to Genesis.
The research firm highlighted improved cash flow outlook as evidence of healthy collections, which suggests the company could accelerate share buybacks in the near term.
According to Macquarie, the stronger financial position could also lead to dividend resumption for Healthcare Services Group in the future.
In other recent news, Healthcare Services Group has announced its second-quarter results for 2025, revealing a mixed performance. The company reported a net loss of $32.4 million, resulting in an earnings per share (EPS) of -$0.44, which fell short of the expected EPS of $0.20. However, the company’s revenue for the quarter reached $458.5 million, exceeding projections by 1.71%. Following these results, Benchmark has raised its price target for Healthcare Services Group from $17.00 to $19.00, maintaining a Buy rating on the stock. Additionally, the company has updated its full-year cash flow outlook to a range of $70 million to $85 million, an increase from the previous estimate of $60 million to $75 million. These developments indicate a positive adjustment in revenue expectations despite the earnings shortfall. The adjustments in financial projections and analyst ratings reflect the company’s potential for improved cash flow in the coming year.
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