Strength Seen in Tenet (THC): Can Its 7.7% Jump Turn into More Strength?
Tenet Healthcare (THC) shares soared 7.7% in the last trading session to close at $89.11. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 11.5% gain over the past four weeks.
The stock price surge can be linked to a piece of upbeat company news, revealing that it expects to surpass the upper limit in its 2023 adjusted EBITDA guidance range. This positive outlook is attributed to robust surgical growth in USPI operations. Concurrently, the completion of the $2.4 billion divestment of three South Carolina hospitals to Novant Health, along with an agreement to divest four hospitals and related operations in California to UCI Health for approximately $975 million in cash, has been announced. These strategic divestments are aimed at streamlining operations and are expected to result in a reduction in leverage for the company.
This hospital operator is expected to post quarterly earnings of $1.55 per share in its upcoming report, which represents a year-over-year change of -20.9%. Revenues are expected to be $5.25 billion, up 5.2% from the year-ago quarter.
Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.
For Tenet, the consensus EPS estimate for the quarter has been revised marginally higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on THC going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Tenet is part of the Zacks Medical - Hospital industry. Acadia Healthcare (ACHC), another stock in the same industry, closed the last trading session 0.5% lower at $81.77. ACHC has returned 7.1% in the past month.
Acadia Healthcare's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.80. Compared to the company's year-ago EPS, this represents a change of +14.3%. Acadia Healthcare currently boasts a Zacks Rank of #2 (Buy).
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