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With a market cap of $13.1 billion, Universal Health Services, Inc. (UHS) is a leading healthcare services provider, owning and operating acute care hospitals, behavioral health centers, surgical hospitals, and outpatient facilities. Based in King of Prussia, Pennsylvania, it offers a wide range of medical services through its Acute Care Hospital and Behavioral Health Care segments.
Shares of the hospital and health facility operator have outperformed the broader market over the past 52 weeks. UHS has surged 50.2% over this time frame, while the broader S&P 500 Index ($SPX) has gained 32.1%. In 2024, UHS stock rallied 35.2%, compared to SPX's 26.1% YTD gain.
In addition, UHS stock has also outpaced the Health Care Select Sector SPDR Fund's (XLV) 12.9% rise over the past 52 weeks and a 7.9% increase on a YTD basis.
Despite reporting better-than-expected Q3 revenue of nearly $4 billion on Oct. 24, shares of UHS dipped 9.8% the next day because its adjusted EPS of $3.71 missed the analysts' estimates. The company also faced higher-than-expected operating costs, up 9.2% year-over-year to $3.6 billion, driven by rising salaries, wages, benefits, and supplies expenses. Lastly, concerns over elevated operating expenses and the potential for reduced margin growth going forward caused uncertainty, leading to the sharp decline in UHS stock.
For the current fiscal year, ending in December, analysts expect UHS’ EPS to grow 51.1% year-over-year to $15.93. The company's earnings surprise history is mixed. It topped the consensus estimates in three of the last four quarters while missing on another occasion.
Among the 18 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 10 “Strong Buy” ratings and eight “Holds.”
On Nov. 27, TD Cowen analyst Ryan Langston lowered the price target on Universal Health to $251, maintaining a “Buy" rating, while citing risks from the incoming administration, potential revisions to entitlement programs, and market sentiment.
As of writing, UHS is trading below the mean price target of $246.27. The Street-high price target of $285, implies a potential upside of 38.7% from the current price levels.
