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On Monday, KeyBanc Capital Markets maintained its Sector Weight rating on Surgery Partners (NASDAQ:SGRY), a healthcare services company with a market capitalization of $3.05 billion, without altering its price target. Following the company’s first-quarter results released last week, analyst Matthew Gillmor updated his financial model for the firm. According to InvestingPro data, the company has demonstrated solid revenue growth of 13.54% over the last twelve months, with EBITDA reaching $628.7 million. Surgery Partners’ first-quarter performance met analysts’ expectations, with a modest EBITDA outperformance and robust same-store (SS) revenue growth. Although same-store pricing appeared weaker, it was influenced by a mix of factors, including increased growth in gastrointestinal procedures due to the calendar effect and the assimilation of the previous year’s mergers and acquisitions into the same-store base. InvestingPro analysis reveals that while the company isn’t currently profitable, analysts expect positive earnings this year, with an EPS forecast of $0.98 for 2025.
Gillmor noted these trends were anticipated by Surgery Partners’ management and are projected to normalize throughout 2025. He expressed optimism about the long-term growth potential for Surgery Partners and the ambulatory surgery center (ASC) industry as a whole.
The analyst also mentioned Bain Capital’s nonbinding acquisition proposal for Surgery Partners, suggesting that it will likely be accepted around the proposed price of $25.75. Bain’s interest in acquiring the company underscores the potential they see in Surgery Partners’ business and the ASC industry.
Despite the positive outlook on the company’s growth, KeyBanc’s Sector Weight rating indicates a neutral stance, reflecting a view that the stock is expected to perform in line with the average returns of the sector over the next 12 months. The decision not to adjust the price target suggests that the current valuation adequately reflects the company’s prospects according to KeyBanc’s analysis. Based on InvestingPro’s comprehensive Fair Value analysis, Surgery Partners appears to be trading near its fair value. The stock has shown strong momentum with a YTD return of 13.08%, and analysts maintain a bullish consensus with price targets ranging from $25 to $36. For deeper insights into Surgery Partners’ valuation and growth prospects, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.
Surgery Partners operates in a dynamic healthcare sector where the demand for outpatient surgical services continues to grow. The company’s focus on same-store revenue growth and strategic M&A activities are key factors that could influence its future performance. As the situation with Bain’s acquisition proposal unfolds, it will be a significant point of interest for investors and the market.
In other recent news, Surgery Partners reported its first-quarter 2025 earnings with net revenue of $776 million, which marked an 8% year-over-year increase but fell slightly short of the expected $778.04 million. The company’s earnings per share (EPS) were reported at $0.04, missing the forecasted $0.08. Despite the earnings miss, the company maintained its full-year 2025 revenue guidance, projecting between $3.3 billion and $3.45 billion. Surgery Partners also expects an adjusted EBITDA of $555 million to $565 million for the year. Benchmark reaffirmed its Buy rating with a $35 price target, citing confidence in the company’s operational strategy and financial health. Meanwhile, Leerink Partners adjusted its price target for Surgery Partners to $34, down from $36, while maintaining an Outperform rating. The firm noted the company’s consistent performance in meeting its external targets. Surgery Partners continues to focus on mergers and acquisitions, with $54 million invested in capital so far this year, aligning with its typical annual M&A investment level.
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