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Investing.com - Wells Fargo upgraded The Pennant Group (NASDAQ:PNTG) from Equal Weight to Overweight on Tuesday, while raising its price target to $31.00 from $29.00. This new target aligns closely with InvestingPro’s Fair Value assessment, suggesting the stock may be currently undervalued at its present price of $25.40.
The upgrade reflects Wells Fargo’s view that even with conservative assumptions on home health rates and valuation multiples, the stock still shows upside potential. This optimism is supported by The Pennant Group’s strong revenue growth of nearly 30% over the last twelve months and a "GREAT" overall financial health score according to InvestingPro data.
The Pennant Group currently trades at approximately 7.5 times Wells Fargo’s 2027 adjusted EBITDAR estimate, which compares to the company’s five-year average of roughly 12 times next twelve months adjusted EBITDAR.
Wells Fargo’s new price target is based on 10 times its 2027 adjusted EBITDAR estimate for The Pennant Group.
The firm noted that the stock offers a "call option on more material improvement appearing nearly free," suggesting additional upside potential beyond its base case scenario.
In other recent news, The Pennant Group reported its Q3 2025 earnings, which revealed a significant miss in earnings per share (EPS) expectations. The company posted an EPS of $0.17, falling short of the anticipated $0.30, marking a negative surprise of 43.33%. Despite this shortfall, the company’s revenue exceeded expectations, coming in at $229 million compared to the forecasted $222.72 million. In another development, RBC Capital raised its price target for The Pennant Group to $39 from $34, maintaining an Outperform rating on the stock. This adjustment reflects a target enterprise multiple of 11.4x RBC’s revised 2026 adjusted EBITDAR estimate for the company. These recent developments provide a mixed picture for investors evaluating The Pennant Group’s financial performance and market outlook.
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