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Investing.com - Benchmark has reiterated its Buy rating and $21.00 price target on Select Medical (TASE:BLWV) Holdings (NYSE:SEM) following the company’s second-quarter earnings report. The stock, currently trading at $12.08, has recently hit near 52-week lows, presenting a potential opportunity according to InvestingPro data.
Select Medical reported second-quarter revenue of $1.34 billion, in line with expectations, while adjusted EBITDA came in at $125.4 million, slightly below the Street estimate of $126 million. The company’s adjusted earnings per share reached $0.32, exceeding analyst expectations of $0.24, benefiting from a lower effective tax rate and a 3% reduction in shares outstanding. The company has maintained strong revenue growth of 29% over the last twelve months, with InvestingPro analysis indicating positive net income growth expectations for this year.
The healthcare provider maintained its full-year 2025 guidance, which implies adjusted EBITDA growth of 8% and 11% for the third and fourth quarters, respectively. Select Medical operates across multiple healthcare segments including long-term acute care hospitals (LTACH), inpatient rehabilitation facilities (IRF), and outpatient rehabilitation centers.
Benchmark projects 10% adjusted EBITDA growth for fiscal year 2026, based on 5.5% revenue growth and a 40 basis point margin improvement. The firm attributes this outlook to positive rate updates across all three segments, continued double-digit growth in the company’s most profitable inpatient rehabilitation segment, stable high-cost outlier patient thresholds for LTACH, and initial margin benefits from system upgrades in outpatient rehabilitation.
The research firm noted that Select Medical stock currently trades at a valuation approximately four turns below its peers, suggesting potential for share price appreciation as EBITDA growth resumes. This observation aligns with InvestingPro’s Fair Value assessment, which indicates the stock is currently undervalued, supported by a strong free cash flow yield and a modest price-to-book ratio of 0.9x. For deeper insights into Select Medical’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Select Medical Holdings Corporation reported its financial results for the second quarter of 2025. The company achieved an earnings per share (EPS) of $0.60, significantly surpassing the forecasted $0.24, representing a 150% surprise. However, revenue for the quarter did not meet expectations, totaling $1.28 billion compared to the anticipated $1.34 billion. This revenue shortfall has raised concerns among investors. Despite the impressive EPS performance, the revenue miss is a key focus for market analysts. These recent developments have led to a cautious outlook from investment firms, though specific upgrades or downgrades were not mentioned in the available reports. The company’s financial performance highlights both the potential for strong earnings growth and the challenges posed by revenue expectations.
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