How Will Universal Health (UHS) Stock React To This Ratings Initiation?

NEW YORK (TheStreet) -- Leerink Swann initiated its coverage of Universal Health Services (UHS) with an "outperform" rating and a price target of $135.

"We do see near-term earnings as solidly achievable and are in line at $5.75 for 2014 earnings as access expansion and jobs growth in key markets such as Nevada and Texas offer admission growth tailwinds," said analyst Ana Gupte.

Shares of the hospital management are down 0.57% to $112.61.

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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 solid stock price performance, revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • UHS's revenue growth trails the industry average of 20.7%. Since the same quarter one year prior, revenues rose by 10.1%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.89, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.08, which illustrates the ability to avoid short-term cash problems.
  • Compared to its closing price of one year ago, UHS's share price has jumped by 58.89%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, UHS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has increased to $263.78 million or 20.86% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 10.50%.
  • UNIVERSAL HEALTH SVCS INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, UNIVERSAL HEALTH SVCS INC increased its bottom line by earning $5.13 versus $4.53 in the prior year. This year, the market expects an improvement in earnings ($5.75 versus $5.13).
  • You can view the full analysis from the report here: UHS Ratings Report
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