Universal Health Services Trade Flat After Earnings Top Forecasts

Share in Universal Health Services, Inc. (UHS) traded mostly unchanged in Monday’s extended-hours session after the King Of Prussia, Pennsylvania-based company delivered a better-than-expected quarterly earnings report.

The hospital and health facility operator posted first quarter (Q1) adjusted earnings of $2.44 per share, comfortably ahead of the $2.15 a share figure Wall Street had expected. Moreover, the bottom line grew 41% from a year earlier. Meanwhile, revenues for the quarter came in at $3.01 billion, up from $2.83 billion in the March 2020 quarter. A 26.3% jump in net revenue per adjusted admission within the company’s acute care services business helped drive healthy top-line growth.

Management remains cautious about what impacts the pandemic will have on full-year earnings, noting that future developments are difficult to predict. “The extent to which the COVID-19 pandemic and measures taken in response thereto impact our business, results of operations, and financial condition will depend on numerous factors and future developments, most of which are beyond our control or ability to predict,” the company said in a statement accompanying the financial results, per the UHS website.

As of April 27, 2021, Universal Heath Services stock has a market value of $12.61 billion, offers a small 0.55% dividend yield, and trades 6% higher since the start of the year. Over the past 12 months, the shares have gained around 43%, underperforming the sector average by 17.78% during the same period. From a valuation standpoint, the stock trades in line with its five-year forward earnings multiple of 13.5.

Wall Street View

Last week, Deutsche Bank analyst Pito Chickering raised the bank’s price target on the stock to $160 from $145 and reiterated his ‘Buy’ rating. Chickering likes the broader healthcare industry, particularly providers who offer mental health services in the wake of the health crisis.

Coverage elsewhere on Wall Street also remains primarily bullish. The stock receives 7 ‘Buy’ ratings, 5 ‘Hold’ ratings, and just 1 ‘Underweight’ rating. Twelve-month price targets range from a Street-high $166 to a low of $133, with the median pegged at $150.5. The stock, currently trading at $145.78, offers a 3% discount to the median.

Technical Outlook and Trading Tactics

Universal Health shares have recently staged a rally from a multi-month uptrend line, pushing through crucial overhead resistance at $143.50. Over the past few trading sessions, the price has held above this closely watched level, indicating the bulls have successfully flipped resistance into support.

Those who buy in this area should look for a retest of the all-time high at $157.79. Protect capital by setting a tight stop-loss order slightly below the April 16 breakout price bar at $142.

For a look at today’s earnings schedule, check out our earnings calendar.