Story updated at 9:55 a.m. to reflect market activity.
Shares of Universal Health gained 3.5% to $76.94 in morning trading.
The bank set a price target of $86 for the hospital operator. According to Keybanc analysts the stock now offers a compelling entry point following a recent pullback.
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TheStreet Ratings team rates UNIVERSAL HEALTH SVCS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNIVERSAL HEALTH SVCS INC (UHS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.4%. Since the same quarter one year prior, revenues slightly increased by 2.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has slightly increased to $292.51 million or 4.36% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -26.40%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Health Care Providers & Services industry and the overall market, UNIVERSAL HEALTH SVCS INC's return on equity exceeds that of both the industry average and the S&P 500.
- UNIVERSAL HEALTH SVCS INC's earnings per share declined by 10.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, UNIVERSAL HEALTH SVCS INC increased its bottom line by earning $5.13 versus $4.53 in the prior year. For the next year, the market is expecting a contraction of 2.5% in earnings ($5.00 versus $5.13).
- You can view the full analysis from the report here: UHS Ratings Report