Universal Health Services Anticipates Strong Q4 Earnings Amid Rising Expenses
Universal Health Services, Inc. (UHS), based in King of Prussia, Pennsylvania, stands as a key player in healthcare management with a market cap of $12.3 billion. The company runs a wide array of facilities, including acute care hospitals, behavioral health centers, outpatient clinics, and surgical hospitals. Additionally, UHS offers commercial health insurance and various management services, such as physician recruitment and administrative support.
Upcoming Earnings Report and Analyst Projections
On Tuesday, Feb. 25, UHS plans to announce its fiscal Q4 earnings. Analysts predict the company will report earning $4.18 per share, marking a significant increase of 33.6% from the $3.13 per share made during the same period last year. Historically, UHS has demonstrated strong earnings performance, exceeding Wall Street’s estimates in three of the last four quarters; however, it did fall short once, missing the consensus EPS estimate by 1.1% in Q3.
Fiscal Year 2024 Expectations
Looking ahead to fiscal 2024, expectations remain high, with analysts forecasting an EPS of $15.92, which represents a remarkable increase of 51% compared to $10.54 in fiscal 2023.
Stock Performance Compared to the Market
Over the previous 52 weeks, shares of UHS have increased by 22.1%, which is slightly lower than the S&P 500 Index’s ($SPX) impressive 25.1% gain. However, UHS has outperformed the Health Care Select Sector SPDR Fund’s (XLV) 1.5% rise during that timeframe.
Challenges and Stock Sentiment
Despite reporting Q3 revenue of nearly $4 billion, UHS shares dropped 9.8% the following day due to escalating operational costs. Salaries, wages, and benefits surged 7% to reach $1.9 billion, while total operating costs rose 9.2% to $3.6 billion. These factors created pressure on profit margins despite strong growth in patient admissions. Furthermore, adjusted EPS of $3.71 did not meet the consensus estimate. A decline in cash and cash equivalents, down 11.2% to $106.1 million as of Sept. 30, 2024, has also impacted investor confidence.
Analyst Ratings and Future Outlook
The analyst consensus for UHS is cautiously optimistic, holding a “Moderate Buy” rating overall. Among the 17 analysts tracking the stock, eight recommend a “Strong Buy”, while nine advise a “Hold.” This represents a shift from three months ago when 11 analysts initially suggested a “Strong Buy.” Currently, UHS is trading below the average analyst price target of $237.86.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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