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On Thursday, Universal Health Services (NYSE:UHS) received a reiterated Buy rating from UBS, with analysts maintaining their $267.00 price target on the company’s stock. According to InvestingPro data, the company currently trades at an attractive P/E ratio of 12.7 and boasts a perfect Piotroski Score of 9, indicating strong financial health and operational efficiency. InvestingPro analysis suggests the stock is currently undervalued relative to its Fair Value. The healthcare provider, with a market capitalization of $12.5 billion, reported a stronger-than-expected fourth quarter for the fiscal year 2024, with adjusted EBITDA less non-controlling interests (NCI) reaching $615 million. This figure surpassed both UBS’s estimate and the consensus by $47 million and $49 million, respectively. The company’s impressive performance is backed by solid fundamentals, with InvestingPro data showing a healthy revenue growth of 9.9% and a robust gross profit margin of 41.7%. For deeper insights into UHS’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
The company’s acute care segment exceeded adjusted EBITDA expectations by $6 million, while the behavioral segment outperformed by $38 million. However, corporate selling, general, and administrative expenses (SG&A) were $6 million above projections. Universal Health Services also reported consolidated revenues of $4,114 million for the quarter, topping UBS and consensus estimates by $117 million and $108 million, respectively. The company’s adjusted EBITDA margins stood at 14.9%, modestly higher than anticipated and beating the consensus by 81 basis points.
In the earnings report, Universal Health Services disclosed an additional $35 million in incremental malpractice reserves for the fourth quarter of 2024. Management highlighted the current volatile environment for healthcare services as the reason for adjusting the malpractice reserves towards the higher end of the actuarial range. This move reflects the company’s cautious stance in a fluctuating market landscape.
UBS’s continued confidence in Universal Health Services is based on the company’s performance metrics that have shown resilience and strength in a challenging sector. The firm’s analysis indicates that the healthcare provider is well-positioned to maintain its positive trajectory, as reflected in the reiterated Buy rating and price target.
In other recent news, Universal Health Services reported fourth-quarter earnings and revenue that exceeded analyst expectations. The company achieved an adjusted earnings per share of $4.92, surpassing the analyst consensus of $4.14 by $0.78. Revenue for the quarter reached $4.11 billion, which was higher than the estimated $4.01 billion and marked an 11.1% increase from the previous year’s $3.704 billion. Net income attributable to Universal Health Services rose to $332.4 million, or $4.96 per diluted share, compared to $216.4 million, or $3.16 per diluted share, in the same quarter last year. For the full year 2024, the company reported net revenues of $15.828 billion, reflecting a 10.8% increase from $14.282 billion in 2023. Adjusted earnings per share for 2024 were $16.61, compared to $10.54 in the previous year. Looking ahead, Universal Health Services forecasts 2025 net revenues between $17.02 billion and $17.364 billion, indicating growth of 7.5% to 9.7% over 2024. The company expects adjusted earnings per share for 2025 to range from $18.45 to $19.95.
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