Analyst Brian Tanquilut of Jefferies maintained a Buy rating on Surgery Partners, with a price target of $28.00.
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Brian Tanquilut has given his Buy rating due to a combination of factors that highlight the potential for future growth and value creation in Surgery Partners. Despite the recent guidance cut for FY25, which was influenced by a deceleration in volumes and a shift in payor mix towards lower-paying Medicare, Tanquilut sees significant opportunities in the company’s strategic asset divestitures. These divestitures are expected to help deleverage the company’s balance sheet, which has been a concern due to its high debt levels and associated interest expenses.
Furthermore, Tanquilut points out that the management’s efforts to rationalize their portfolio through the sale of assets and partnerships could drive substantial equity value. The recent sale of ambulatory surgery centers (ASCs) at favorable valuations supports this view, suggesting that further divestitures could enhance the stock’s performance. Although the slower pace of mergers and acquisitions has contributed to the guidance cut, the focus on improving financial leverage and free cash flow generation remains a central theme in the investment narrative for Surgery Partners.
Tanquilut covers the Healthcare sector, focusing on stocks such as Chemed, Cardinal Health, and CVS Health. According to TipRanks, Tanquilut has an average return of 5.5% and a 52.55% success rate on recommended stocks.