Analyst Whit Mayo of Leerink Partners reiterated a Buy rating on Tenet Healthcare (THC – Research Report), retaining the price target of $185.00.
Whit Mayo has given his Buy rating due to a combination of factors that highlight Tenet Healthcare’s strong position and potential for growth. Mayo draws parallels between Tenet Healthcare and HCA’s successful leveraged buyout (LBO) two decades ago, noting that despite Tenet’s robust performance post-pandemic, its valuation does not reflect its true potential. This mispricing, according to Mayo, is evident when considering the impressive internal rate of returns (IRRs) that could be achieved through a hypothetical LBO.
Current equity levels suggest IRRs ranging from 34% to 47%, indicating that Tenet’s market valuation is significantly undervalued compared to private market valuations. Mayo’s analysis suggests that with modest equity capital, Tenet could achieve substantial returns, even under conservative assumptions. The potential for high returns, coupled with the company’s strong financial position, supports Mayo’s Buy rating for Tenet Healthcare.
In another report released on February 13, Truist Financial also reiterated a Buy rating on the stock with a $175.00 price target.