Universal Health Services Faces Challenges Despite Solid Market Presence
Valued at nearly $12 billion, Universal Health Services, Inc. (UHS) is a leading player in the healthcare sector, owning and operating acute care hospitals alongside outpatient and behavioral healthcare facilities. Headquartered in King of Prussia, Pennsylvania, the company offers a variety of services, including general and specialty surgery, internal medicine, emergency care, oncology, pediatric, and pharmacy services.
Evaluating a Large-Cap Player in Healthcare
With a market capitalization exceeding $10 billion, UHS is classified as a “large-cap” stock. It is one of the largest and most respected providers of hospital and healthcare services in the U.S., operating over 400 acute care hospitals, behavioral health facilities, and ambulatory centers across the U.S., Puerto Rico, and the U.K.
Recent Stock Performance Raises Concerns
Despite its established reputation, UHS has seen a decline of 25.5% from its 52-week high of $243.25, reached on September 24. Additionally, over the past three months, the stock has fallen by 25%, significantly lagging behind the Nasdaq Composite’s ($NASX) 10.8% increase during the same period.
Looking at a longer timeline, UHS’s performance over the last 52 weeks shows an 18.4% increase, underperforming NASX’s 33.6% returns. In the past six months, its shares slipped by 5.1%, while NASX enjoyed gains of 14.5% during that interval.
Supporting the negative trend, UHS has traded below its 200-day moving average since early December and has remained under its 50-day average since late October.
Mixed Q3 Earnings Report Influences Stock Prices
On October 24, UHS released its Q3 earnings results, which prompted a share price drop of 9.8% the following day. Revenue saw a year-over-year increase of 11.2%, reaching $3.96 billion, which was 1.3% above analysts’ expectations largely due to growth in acute care and behavioral health services.
However, the adjusted earnings per share (EPS) of $3.71—up 45.5% from the previous year—fell short of the expected $3.75. This disappointment stemmed from increased operating expenses, including rising salaries, wages, benefits, and supply costs.
Comparative Outlook and Analyst Sentiments
In comparison, UHS has outperformed its competitor, HCA Healthcare, Inc. (HCA), which saw a 12.8% gain over the past year but declined by 10.8% in the last six months.
Despite UHS’s recent struggles, analysts express moderate optimism regarding its future. With a consensus rating of “Moderate Buy” among 18 analysts, the average price target of $238.47 implies a potential upside of 31.6% from its current share price.
On the date of publication, Neharika Jain did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are provided solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
