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Valued at a market cap of almost $12 billion, Universal Health Services, Inc. (UHS) owns and operates acute care hospitals, as well as outpatient and behavioral healthcare facilities. The King of Prussia, Pennsylvania-based company's range of services includes general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, pediatric services, pharmacy services, and behavioral health services.
Companies worth $10 billion or more are generally described as “large-cap” stocks, and Universal Health Services fits right into that category. The healthcare company is one of the nation's largest and most respected providers of hospital and healthcare services and has more than 400 Acute Care hospitals, Behavioral Health facilities, and ambulatory centers across the U.S., Puerto Rico, and the U.K.
Despite its strengths, the company has declined 25.5% from its 52-week high of $243.25, achieved on Sep. 24. Moreover, it has declined 25% over the past three months, significantly underperforming the broader Nasdaq Composite’s ($NASX) 10.8% increase over the same time frame.
Moreover, in the longer term, UHS has gained 18.4% over the past 52 weeks, significantly underperforming NASX’s 33.6% returns. Shares of UHS slipped 5.1% over the past six months, falling behind NASX’s 14.5% gains over the same time frame.
To confirm its bearish trend, UHS has been trading below its 200-day moving average since early December. Moreover, it has remained below its 50-day moving average since late October.
UHS released its mixed Q3 earnings results on Oct. 24 and shares of the company fell 9.8% the following day. Its revenue increased 11.2% year-over-year to $3.96 billion and surpassed the forecasted figure by 1.3%, primarily due to robust revenue growth in its acute care hospital services and behavioral health care services segments.
However, its adjusted EPS of $3.71, which grew by a massive 45.5% from the year-ago quarter, missed the consensus estimates of $3.75. Higher operating expenses due to increases in salaries, wages and benefits, other operating expenses, and supplies costs led to its bottom-line miss.
Yet, UHS has outperformed its rival, HCA Healthcare, Inc. (HCA), which gained 12.8% over the past 52 weeks and declined 10.8% over six months.
Despite Universal Health’s recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 18 analysts covering it, and the mean price target of $238.47 suggests a massive 31.6% premium to its current levels.
