Universal Health’s Mixed Q1 Performance and Strategic Uncertainty Justify Hold Rating

Analyst Craig Hettenbach of Morgan Stanley maintained a Hold rating on Universal Health (UHS – Research Report), retaining the price target of $200.00.

Craig Hettenbach has given his Hold rating due to a combination of factors that reflect both positive and negative aspects of Universal Health’s recent performance. The company’s revenue for the first quarter increased by 6.7% year-over-year, reaching $4.1 billion, but this was still below market expectations by 1.4%. On the other hand, the adjusted EBITDA margin of 14.6% exceeded expectations, indicating some operational strength.
However, there were concerns in specific areas, such as the decline in behavioral health admissions by 1.6% year-over-year, which was significantly below the anticipated growth of 2.9%. Additionally, while revenue per adjusted admission in behavioral health rose by 7.2%, surpassing expectations, the overall mixed results and the impact of weather on behavioral visits contribute to a cautious outlook. These factors, combined with the company’s strategic initiatives and capital allocation priorities, underpin the Hold rating as the market awaits further clarity on future performance.

In another report released today, Bank of America Securities also reiterated a Hold rating on the stock with a $215.00 price target.

UHS’s price has also changed moderately for the past six months – from $204.550 to $172.910, which is a -15.47% drop .