Surgery Partners stock holds Buy rating, $35 target from Benchmark

On Tuesday, Surgery Partners (NASDAQ:SGRY) maintained its Buy rating and $35.00 price target from Benchmark, aligning with the broader analyst consensus that shows significant upside potential. According to InvestingPro data, the stock, currently trading at $23, appears undervalued based on its Fair Value analysis. The company’s first-quarter results for 2025 were reported as aligned with expectations, with LTM revenue reaching $3.17 billion. Surgery Partners has confirmed its full-year 2025 guidance for revenue and adjusted EBITDA, anticipating an approximate 10% increase at the midpoint. Surgery Partners has invested $54 million in capital so far this year, indicating a return to a more typical annual M&A investment level of around $200 million, compared to the nearly $379 million spent last year. The previous year’s higher spending had led to increased transaction and integration expenses, which had an adverse effect on profit margins.

This trend of higher costs is expected to subside and decrease significantly in the second half of 2025. One key point that the Benchmark analyst highlighted was Surgery Partners’ declining financial leverage, which currently stands at 4.1 times. Improved cash flow throughout the year could serve as a positive driver for the company’s stock, with leverage projected to near 3 times by the end of the year. The company’s strong cash position is evidenced by its healthy current ratio of 1.89 and significant levered free cash flow of $209.7 million over the last twelve months.

Surgery Partners is also strategically positioned to mitigate various macroeconomic concerns. The company has no significant near-term or midterm risks related to tariff-induced price hikes or supply chain issues. Additionally, Medicare and Medicaid account for less than 5% of Surgery Partners’ revenue, minimizing exposure to changes in these programs. Even with the discussions around Medicare site neutral payments, the company is expected to experience either incremental tailwinds or, in the worst-case scenario, a negligible 1% headwind.

The analyst’s reiteration of the Buy rating and $35 price target reflects confidence in Surgery Partners’ operational strategy and financial health, as well as its ability to navigate through potential macroeconomic challenges without significant impact on its financial performance. InvestingPro data shows analysts expect the company to return to profitability this year, with projected earnings per share of $0.98 for 2025. Discover more detailed insights and analysis in the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, Surgery Partners reported its first-quarter 2025 earnings, showcasing a mixed performance. The company posted earnings per share of $0.04, which fell short of the forecasted $0.08. Net revenue was reported at $776 million, slightly below the expected $778.04 million, but still marking an 8% increase year-over-year. Additionally, Surgery Partners achieved an adjusted EBITDA of $103.9 million, a 7% increase compared to the previous year. The company is also expanding its capabilities with investments in surgical robots and new facilities, indicating a focus on future growth. In terms of analyst activity, Leerink Partners revised its price target for Surgery Partners to $34 from $36, maintaining an Outperform rating. The firm expressed confidence in the company’s ability to meet its goals and noted a strong presence of mergers and acquisitions activity. Surgery Partners has also projected full-year 2025 revenue between $3.3 billion and $3.45 billion, with expectations of adjusted EBITDA ranging from $555 million to $565 million.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.