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UBS reaffirmed its Buy rating and $280.00 price target on Universal Health Services (NYSE:UHS) Wednesday, representing significant upside from the current trading price of $171.76. According to InvestingPro analysis, UHS maintains a GREAT financial health score, with particularly strong profitability metrics. The investment firm maintained its positive stance despite acknowledging challenges in the healthcare provider’s behavioral health segment.
The company’s acute care volumes are meeting expectations, according to UBS. Management clarified that recent comments about a larger mix of medical versus surgical cases were reiterating points from the first-quarter earnings call rather than signaling any new trend in the operating environment. With a robust revenue growth of 9.73% and an attractive P/E ratio of 10.21, UHS demonstrates strong operational performance. For deeper insights into UHS’s valuation metrics and growth potential, consider accessing the comprehensive Pro Research Report available on InvestingPro.
On the behavioral health side, Universal Health Services continues to target 2.5-3% same-store patient day growth as an achievable intermediate and long-term goal. However, the company acknowledged that softer volume growth in the first quarter of 2025, when adjusted patient days declined 0.3%, makes reaching that target more difficult for the full year 2025.
UHS would need to deliver an average of 3.4% patient day growth from the second through fourth quarters to achieve a 2.5% annual growth rate. This represents a significant acceleration from current performance levels.
Despite these volume challenges, behavioral pricing growth remains robust at 5.8% in the first quarter. UBS indicated this pricing strength should be sufficient for Universal Health Services to reach its full-year same-store revenue targets even if behavioral health volumes fall short of the company’s target range. The company’s strong financial position is further evidenced by its 23-year track record of maintaining dividend payments and impressive free cash flow yield of 10%. InvestingPro subscribers can access additional insights, including 8 more ProTips and detailed financial metrics that provide a comprehensive view of UHS’s market position and growth potential.
In other recent news, Universal Health Services reported its first-quarter 2025 earnings, with earnings per share of $4.80, surpassing analyst expectations of $4.36. However, the company’s revenue fell short of forecasts, coming in at $4.1 billion compared to the anticipated $4.16 billion. Despite the revenue miss, Universal Health Services maintained its full-year earnings guidance, highlighting strong performance in its acute care and behavioral health segments. Additionally, the company announced a quarterly cash dividend of $0.20 per share, payable on June 16, 2025, to shareholders of record by June 2, 2025.
Analysts have provided mixed ratings on Universal Health Services. Morgan Stanley (NYSE:MS) reiterated an Equalweight rating, emphasizing the company’s solid utilization trends in its acute business and potential for a catchup trade due to underperformance compared to peers. Cantor Fitzgerald also maintained a Neutral rating, noting staffing pressures in several cities but recognizing the company’s strong pricing discipline and positive trends in inpatient psychiatric care metrics. These insights suggest a cautious but stable outlook for the company amidst ongoing challenges.
Universal Health Services continues to navigate staffing challenges, particularly in inpatient acute care positions, without significant increases in bonus incentives. The company has not publicly commented on these analyst observations or the reaffirmed stock ratings. Overall, these developments reflect a complex landscape for Universal Health Services, with both positive earnings surprises and ongoing operational challenges.
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