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On Monday, Mizuho (NYSE:MFG) Securities maintained their Outperform rating on Select Medical (TASE:BLWV) Holdings Corporation (NYSE:SEM) but reduced the stock’s price target from $25.00 to $21.00. This adjustment followed the company’s first-quarter earnings for 2025, which led to a 2% decrease in the adjusted EBITDA guidance for the year. The company, currently trading at $14.26 with a market capitalization of $1.83 billion, has seen significant pressure recently. InvestingPro analysis reveals two key insights about SEM’s current situation, with additional ProTips available to subscribers.
In response to the earnings report, shares of Select Medical Holdings experienced a significant decline, dropping by 22% compared to the S&P 500’s modest gain of 1.5%. Mizuho’s analysts pointed out that the sell-off might be an exaggerated reaction to the company’s financial results, which were impacted by an unusually severe flu season.
The firm’s analysts believe that the challenges faced by Select Medical Holdings due to the elevated flu season are temporary and expect hospital operators to adapt more effectively to the changing Medicare outlier environment over time. Despite the lowered estimates and price target, the analysts see the strength in the company’s inpatient rehabilitation segment as a positive aspect of the investment.
Select Medical Holdings, which operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers, faced outlier pressures that affected its performance in the early part of 2025. According to InvestingPro data, analysts maintain a bullish consensus on the stock, with price targets ranging from $15 to $25. The company’s current Fair Value assessment suggests it may be undervalued at current levels. For detailed analysis and more insights, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Select Medical Holdings Corporation reported its first-quarter earnings for 2025, showcasing a mixed performance. The company exceeded analysts’ expectations with an earnings per share (EPS) of $0.75, more than doubling the forecasted $0.37. However, revenue fell short of projections, coming in at $1.35 billion against an anticipated $1.39 billion. Select Medical revised its 2025 guidance, estimating revenue between $5.3 billion and $5.5 billion. The inpatient rehabilitation division demonstrated strong growth with a 16% increase in revenue, while the critical illness recovery hospitals faced a 3% revenue decline. Adjusted EBITDA decreased by 9% to $151.4 million, reflecting challenges in certain segments. Analysts from Deutsche Bank (ETR:DBKGn) and RBC Capital Markets discussed the impact of regulatory changes on the company’s operations, particularly in the critical illness recovery segment. Select Medical continues to focus on strategic growth and regulatory engagement, with several new inpatient rehabilitation units planned for the coming years.
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