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Investing.com - RBC Capital reiterated its Outperform rating and $20.00 price target on Select Medical Holdings (NYSE:SEM) on Tuesday, identifying the healthcare provider, which generates annual revenue of $5.28 billion, as a top investment idea.
The firm noted that despite recent gains of 9.6% since earlier this month, Select Medical shares remain undervalued and present an attractive entry point as regulatory pressures diminish. This assessment aligns with InvestingPro analysis, which shows the stock trading below its Fair Value with a compelling 10% free cash flow yield.
RBC Capital believes Select Medical is well positioned to achieve Critical Illness Recovery Hospital (CIRH) margin stability next year as Long-Term Acute Care (LTAC) regulatory headwinds ease.
The investment firm expects continued solid contributions from Inpatient Rehabilitation Facilities (IRF) alongside the CIRH margin stabilization.
RBC Capital predicts multiple recovery for Select Medical should materialize through the first half of next year as the company executes on earnings expectations.
In other recent news, Select Medical Holdings has been the subject of several analyst actions and corporate developments. RBC Capital raised its price target for Select Medical to $20 from $16, maintaining an Outperform rating, citing regulatory relief as a factor that presents an attractive opportunity for investors. Similarly, Benchmark kept its Buy rating and $21 price target, anticipating that Select Medical will meet its fiscal year 2025 guidance, partially due to a delay in cost report reconciliation for long-term acute care hospitals. However, Mizuho has adjusted its price target downward to $18 from $21, citing challenges in the company’s critical illness recovery hospital segment due to Medicare regulations.
In leadership changes, Select Medical announced the appointment of Thomas P. Mullin as its new CEO, succeeding David S. Chernow, who will become vice chairman of the board. These developments come as Select Medical prepares to release its third-quarter earnings report on October 30. Investors are keenly watching these updates, especially with the mix of analyst opinions and strategic leadership changes.
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