Update (9:50 a.m.): Updated with Thursday market open information.
NEW YORK (TheStreet) -- Jefferies increased its target price on Healthcare Services Group (HCSG) to $29 and set a "hold" rating. The firm noted continued margin improvement and expectations for 10-15% top line growth. Jefferies also said the company's dining infrastructure is better utilized.
The stock was rising 0.73% to $27.75 at 9:48 a.m. on Thursday.
Separately, TheStreet Ratings team rates HEALTHCARE SERVICES GROUP as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate HEALTHCARE SERVICES GROUP (HCSG) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- HCSG's revenue growth has slightly outpaced the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 9.7%. 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.
- HCSG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.67, which clearly demonstrates the ability to cover short-term cash needs.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- HEALTHCARE SERVICES GROUP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HEALTHCARE SERVICES GROUP increased its bottom line by earning $0.69 versus $0.66 in the prior year. This year, the market expects an improvement in earnings ($0.90 versus $0.69).
- The change in net income from the same quarter one year ago has significantly exceeded that of the Commercial Services & Supplies industry average, but is less than that of the S&P 500. The net income has significantly decreased by 57.4% when compared to the same quarter one year ago, falling from $12.80 million to $5.45 million.
- You can view the full analysis from the report here: HCSG Ratings Report