US Physical Therapy: Strengthening Fundamentals, Margin Expansion, and Disciplined M&A Support a Buy Rating

J.P. Morgan analyst Benjamin Rossi has maintained their bullish stance on USPH stock, giving a Buy rating on January 15.

Benjamin Rossi has given his Buy rating due to a combination of factors that point to improving fundamentals and attractive growth prospects for U.S. Physical Therapy. Management successfully steered the company through a difficult 2025 characterized by sizable Medicare reimbursement pressure, using tighter operational discipline, technology-driven efficiency, and selective M&A to help offset headwinds while maintaining healthy clinic-level performance. Looking ahead, the expected shift to a more stable Medicare reimbursement backdrop in 2026, including a modest rate increase and reduced risk of further major cuts, provides better visibility and should ease labor constraints over time.

At the same time, USPH is actively enhancing its business mix and margins by pruning lower-return payer contracts, expanding higher-margin home care in favorable geographies, and growing cash-pay and on-site employer services. The company’s digital initiatives, such as tools that streamline front-desk workflows and clinical documentation, are already demonstrating potential labor savings at the clinic level, supporting margin resilience. Finally, a solid balance sheet with modest leverage underpins an active and disciplined acquisition strategy, with a tilt toward the IIP/on-site employer segment where valuation multiples are more attractive and demand trends are strong. Together, these elements support Rossi’s view that USPH is well positioned for profitable growth and justify his Buy recommendation.

In another report released on January 15, TipRanks – Google also upgraded the stock to a Buy with a $97.00 price target.