Mizuho raises Encompass Health price target to $130, keeps Outperform

On Monday, Mizuho (NYSE:MFG) Securities adjusted its financial outlook for Encompass Health Corp (NYSE:EHC), increasing the price target to $130 from the previous $110 and maintaining an Outperform rating on the company’s stock. Trading at $113.37 and near its 52-week high of $114.38, the stock has shown remarkable momentum with a 17.95% gain in the past week. This price target adjustment comes after Encompass Health reported first-quarter earnings for 2025 that surpassed consensus expectations for adjusted EBITDA by 7.6%. The company’s strong performance was attributed to robust patient volumes, effective expense management, and a favorable payer mix.

The analyst at Mizuho, Ann Hynes, noted the reasons for the raised price target and improved earnings estimates for the years 2025 to 2027. According to InvestingPro data, four analysts have recently revised their earnings estimates upward, and the stock maintains a Strong Buy consensus. The updated guidance from Encompass Health, which saw a 1.9% increase at the midpoint for the 2025 adjusted EBITDA forecast, was a key factor in the analyst’s reassessment. However, this guidance did not account for the continuation of the favorable payer mix experienced in the first quarter, which could indicate a conservative estimate and potential for further upside.

Encompass Health’s first-quarter performance has led Mizuho to believe that the company has a high degree of earnings visibility. The analyst emphasized that given the recent results and updated guidance, there is a likelihood for more upward revisions to earnings estimates in the future.

The analyst’s statement highlighted the company’s solid Q1:25 results, which were driven by several positive factors and led to the increased earnings estimates. The reiteration of the Outperform rating by Mizuho reflects confidence in Encompass Health’s continued strong performance and potential for growth.

Investors and market watchers will be keeping a close eye on Encompass Health’s stock as the company continues to navigate the healthcare sector, bolstered by strong quarterly results and positive adjustments to its financial projections by industry analysts. The company has demonstrated solid fundamentals with 11.21% revenue growth and maintains a "GREAT" financial health score on InvestingPro. For deeper insights into Encompass Health’s valuation and growth prospects, including 10+ additional ProTips and comprehensive financial metrics, investors can access the detailed Pro Research Report available on InvestingPro.

In other recent news, Encompass Health Corp reported impressive financial results for the first quarter of 2025, surpassing analysts’ expectations. The company posted an earnings per share (EPS) of $1.37, exceeding the forecasted $1.20, and reported revenue of $1.46 billion, which also surpassed the anticipated $1.43 billion. This performance represents a 10.6% year-over-year increase in revenue and a 14.9% rise in adjusted EBITDA. The strong financial results prompted Encompass Health to raise its full-year guidance, projecting higher net operating revenue and EPS for 2025. RBC Capital Markets responded to these developments by increasing Encompass Health’s stock price target from $110.00 to $125.00, maintaining an Outperform rating. Analysts highlighted the company’s favorable shift in payer mix, with Medicare Fee-For-Service volumes surpassing Medicare Advantage for the first time in three years. Encompass Health also plans to continue its strategic expansions, including the opening of new hospitals and the addition of beds to existing facilities, to meet growing demand for rehabilitation services.

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