Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - Mizuho (NYSE:MFG) lowered its price target on Select Medical (TASE:BLWV) Holdings (NYSE:SEM) to $18.00 from $21.00 on Monday, while maintaining an Outperform rating on the healthcare provider’s stock. The company, currently trading at $12.07 with a market capitalization of $1.55 billion, is trading near its 52-week low of $11.65. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value assessment.
The price target reduction follows what Mizuho described as "disappointing" second-quarter 2025 earnings, with the company’s critical illness recovery hospital (LTCH) segment facing continued pressure from the Medicare high-cost outlier threshold and the 20% transmittal rule. Despite these challenges, InvestingPro data shows the company maintains a healthy 17.1% gross profit margin and generated $182.1 million in levered free cash flow over the last twelve months.
Despite these challenges, Mizuho highlighted Select Medical’s inpatient rehabilitation (IRF) segment as a bright spot in the company’s operations, noting it remains a highlight in the overall business.
Mizuho maintained its 2025-2027 estimates for Select Medical Holdings, expressing confidence that hospital operators should eventually adjust better to the higher Medicare outlier environment.
The firm expects the IRF segment to continue driving growth for Select Medical, supporting its decision to maintain an Outperform rating despite the reduced price target.
In other recent news, Select Medical Holdings reported its second-quarter 2025 earnings, showing a mixed performance. The company achieved a significant earnings per share (EPS) of $0.60, which was a substantial 150% above the forecast of $0.24. However, the revenue fell short of expectations, coming in at $1.28 billion compared to the anticipated $1.34 billion. Despite the revenue miss, Benchmark reaffirmed its Buy rating on Select Medical, maintaining a price target of $21.00, citing the company’s EPS performance, which benefited from a lower tax rate and share reduction. On the other hand, Mizuho lowered its price target for the company to $18.00, citing disappointing results in the critical illness recovery hospital segment. This segment continues to face challenges related to Medicare regulations. Investors are closely monitoring these developments as they assess the company’s financial health.
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