Street Calls of the Week
Investing.com - JPMorgan has assumed coverage on Surgery Partners (NASDAQ:SGRY) with a Neutral rating and a $27.00 price target, joining other analysts who have set targets ranging from $24 to $36 per share.
The investment bank cited Surgery Partners’ strategic shift to higher acuity procedures and large addressable market opportunity with approximately $150 billion in market potential as positive factors. The company, currently valued at $2.8 billion, has demonstrated strong revenue growth of 12% over the last twelve months.
JPMorgan also highlighted the company’s lower cost profile compared to inpatient surgical procedures as an advantage, along with its focus on procedures that should experience growth with the aging U.S. population, particularly in cardiology and musculoskeletal specialties. According to InvestingPro data, while currently unprofitable, analysts expect the company to return to profitability this year.
Despite these strengths, JPMorgan assigned a Neutral rating due to Surgery Partners’ higher leverage, cash flow conversion challenges, and timing-related issues with the company’s merger and acquisition activities.
The bank remains constructive on the core business and growth trajectory but views Surgery Partners as a relative Neutral within its coverage universe based on these financial considerations.
In other recent news, Surgery Partners reported its second-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share of $0.17, compared to the anticipated $0.16. The company also achieved revenue of $826 million, slightly exceeding the forecasted $819.45 million. Additionally, Surgery Partners announced a significant refinancing move, entering into a second amendment to its credit agreement with Jefferies Finance LLC and other financial institutions. This agreement provides a new tranche of term loans totaling $1.383 billion, replacing or refinancing all existing term loans and revolving credit commitments. In analyst updates, Benchmark reiterated a Buy rating for Surgery Partners, maintaining a price target of $35.00. The firm highlighted that Surgery Partners reported in-line first-quarter results and retained its fiscal year 2025 guidance, although it now expects results to fall in the lower half of the projected ranges. Capital deployment has been slower than anticipated, with only $66 million reached year-to-date. These developments reflect the company’s ongoing financial maneuvers and market positioning.
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