Analyst A.J. Rice from UBS maintained a Buy rating on Healthcare Services and keeping the price target at $22.00.
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A.J. Rice has given his Buy rating due to a combination of factors that suggest a promising outlook for Healthcare Services (HCSG). The company’s management has expressed confidence in achieving mid-single digit organic growth by increasing market penetration, particularly in the environmental and dining services segments. With the nursing home industry rebounding to pre-pandemic occupancy levels, HCSG is well-positioned to enhance its cash collection and expand its service offerings through cross-selling opportunities.
Additionally, HCSG is exploring growth opportunities in the campus market, which emerged as a new avenue during the COVID-19 pandemic. The company sees potential in this fragmented market, which offers similar margin profiles to its core business. Although the campus segment currently represents a small portion of total revenues, it has demonstrated strong year-over-year growth. HCSG’s willingness to consider modest acquisitions further supports its growth strategy, making the stock an attractive buy according to A.J. Rice.