Universal Health (UHS) Up 17% in 3 Months: More Growth Ahead?
Shares of Universal Health Services, Inc. UHS have gained 16.6% in the past three months compared with the industry’s 7.5% growth. The Medical sector and the S&P 500 composite index have gained 1.1% and 9.9%, respectively, in the same time frame. With a market capitalization of $10.1 billion, the average volume of shares traded in the last three months was 0.5 million.
Improved patient volumes, an expansive care network and a commendable financial position continue to drive Universal Health.
The leading U.S. healthcare services provider with a current Zacks Rank #3 (Hold) boasts an impressive track record of beating estimates in each of the trailing four quarters, the average surprise being 5.47%.
Image Source: Zacks Investment Research
Can UHS Retain the Momentum?
The Zacks Consensus Estimate for Universal Health’s 2023 earnings is pegged at $10.34 per share, indicating a 4.7% increase from the year-ago reported figure. The consensus mark for revenues is $14.2 billion, suggesting 6.2% growth from the year-ago number.
The Zacks Consensus Estimate for 2024 earnings is pegged at $11.74 per share, which implies a 13.5% improvement from the 2023 estimate. The consensus mark for revenues is $14.9 billion, suggesting 4.4% growth from the 2023 estimate.
Growing patient volumes and higher patient days continue to aid the performance of Acute Care Hospital Services and Behavioral Health Care Services segments, which in turn, contributes to the overall revenue growth of Universal Health. Management anticipates net revenues to be between $14.130-$14.330 billion in 2023, the midpoint of which indicates a 6.2% rise from the 2022 reported figure.
The continued incidence of mental health issues among Americans is expected to sustain the solid demand for UHS’s behavioral health hospitals in the days ahead. The resumption of elective procedures, which had been earlier delayed to treat a humongous COVID-patient base, may fetch higher revenues for the surgery centers of Universal Health.
As a means to boost the operating revenues and profitability of its owned hospitals, Universal Health launches services, upgrades existing ones, recruits able physicians as well as exerts financial and operational controls.
The healthcare services provider pursues a strategy of purchasing, constructing or leasing hospital facilities, which in turn, enables it to foray into new markets, enhance healthcare delivery capabilities and diversify its treatment network. In the first nine months of 2023, UHS spent $3.7 million on the acquisition of businesses and property.
Universal Health’s healthcare portfolio comprised 358 inpatient facilities and 43 outpatient and other facilities stretched throughout 39 states, Washington, D.C., the UK and Puerto Rico as of Sep 30, 2023.
A solid financial standing is of dire need to pursue business investments and that’s exactly the case with Universal Health. A sound cash balance and robust cash-generating abilities are a testament to UHS’s financial strength. It generated operating cash flows of $815.4 million in the first nine months of 2023, which improved 16.7% year over year. It also distributes capital to shareholders through share repurchases and dividend payments.
Stocks to Consider
Some better-ranked stocks in the Medical space are Insulet Corporation PODD, DexCom, Inc. DXCM and Novo Nordisk A/S NVO. While Insulet currently sports a Zacks Rank #1 (Strong Buy), DexCom and Novo Nordisk carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Insulet’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 105.14%. The Zacks Consensus Estimate for PODD’s 2023 earnings is pegged at $1.91 per share, which indicates a more than 27-fold increase from the year-ago reported figure. The consensus mark for revenues indicates growth of 25.9% from the year-ago reported figure.
The Zacks Consensus Estimate for PODD’s 2023 earnings has moved 0.5% north in the past 30 days. Shares of Insulet have gained 33.6% in the past three months.
The bottom line of DexCom outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 36.43%. The Zacks Consensus Estimate for DXCM’s 2023 earnings implies a rise of 65.5% from the year-ago figure. The consensus mark for revenues indicates growth of 23.5% from the year-ago reported figure.
The Zacks Consensus Estimate for DXCM’s 2023 earnings has moved 5.5% north in the past 60 days. Shares of DexCom have gained 33.3% in the past three months.
Novo Nordisk’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, matched the mark once and missed the same in the remaining one occassion, the average surprise being 0.58%. The consensus estimate for NVO’s 2023 earnings indicates a rise of 51.5% from the year-ago figure. The consensus mark for revenues suggests an improvement of 31.5% from the year-ago reported figure.
The Zacks Consensus Estimate for NVO’s 2023 earnings has moved 0.4% north in the past seven days. Shares of Novo Nordisk have gained 10.9% in the past three months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Novo Nordisk A/S (NVO) : Free Stock Analysis Report
Universal Health Services, Inc. (UHS) : Free Stock Analysis Report
DexCom, Inc. (DXCM) : Free Stock Analysis Report
Insulet Corporation (PODD) : Free Stock Analysis Report
