UHS Stock Forecast & Price Target

Universal Health Services Inc. has demonstrated robust financial performance, with acute care adjusted EBITDA increasing by 21% year-over-year, attributed to solid top-line growth and effective cost controls, which led to a 150 basis point expansion in SS adjusted EBITDA margin to 15.7%. Additionally, the Behavioral Health Services segment reported a 5.5% revenue growth, bolstered by improving rates, and achieved an adjusted EBITDA margin of 23.0%, reflecting a 40 basis point increase year-over-year. Management's optimistic outlook is further supported by the approval of new programs in non-UHS states, indicating potential for future growth.

Universal Health Services faces significant challenges reflected in its projected financial performance, with FY25 earnings anticipated to be approximately 5% lower than previous estimates due to volume and margin headwinds. The company has experienced a decline in key operational metrics, including a 1.6% decrease in adjusted admissions and a 0.3% drop in adjusted patient days, impacting overall revenue generation. Additionally, the enterprise multiple has been forecasted at around 6.0x, indicating a valuation consistent with the trough levels observed in the past year, raising concerns about the company’s financial stability.