On Wednesday, RBC Capital adjusted its outlook on Surgery Partners (NASDAQ:SGRY) shares, reducing the stock's price target to $35 from the previous $49, yet maintaining an Outperform rating. The modification follows a review and update of the investment firm's financial model for the company, along with additional insights on Surgery Partners' recent quarterly performance.
The analyst at RBC Capital provided a statement highlighting the rationale behind the updated price target. The commentary acknowledged the recent decline in the company's share price but expressed continued confidence in the management's strategy for growth. The firm underscored the company's adequate liquidity and cash flow, which are deemed sufficient to support future expansion plans.
The decision to lower the price target to $35 reflects a recalibration of the target multiple, which considers the recent rerating of Surgery Partners' shares. This reassessment comes in the wake of market movements over the past weeks that have impacted the company's stock valuation.
Surgery Partners, which operates a network of surgical facilities across the United States, has been focusing on a development strategy that involves both organic growth and strategic acquisitions. This approach is aimed at enhancing the company's service offerings and expanding its market presence.
The Outperform rating from RBC Capital suggests that the firm anticipates Surgery Partners' stock to outperform the average total return of the stocks in the analyst's coverage universe over the next 12 months. Despite the lowered price target, the Outperform rating indicates a positive outlook on the company's potential for shareholders.
In other recent news, Surgery Partners has reported a robust third quarter with net revenue climbing 14% year-over-year to $770 million and adjusted EBITDA rising by 22% to $128.6 million.
Global investment firm Jefferies has revised its price target for Surgery Partners downward to $40.00 from the previous $47.00, maintaining a Buy rating on the stock. Similarly, TD Cowen has revised its price target for the company to $32.00, down from $36.00, while retaining a Buy rating.
Barclays (LON:BARC) has also adjusted its outlook on the healthcare services company, reducing its price target from $32.00 to $31.00 while maintaining an Equalweight rating. The company's successful recruitment of over 230 new physicians and a 53% increase in total joint replacements were instrumental in these positive results.
Despite facing challenges such as Hurricane Helene, Surgery Partners maintained operational continuity and witnessed growth in surgical case volume and same-facility net revenues.
These recent developments highlight Surgery Partners' ability to navigate financial and operational challenges while maintaining a strong position in the healthcare services sector. The company anticipates full-year net revenue and adjusted EBITDA to exceed $3.075 billion and $508 million, respectively, surpassing its long-term growth target of 2% to 3% with a 4% same-store case growth year-to-date.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Surgery Partners' (NASDAQ:SGRY) current financial situation and market performance. The company's market capitalization stands at $2.88 billion, with a revenue of $2.99 billion for the last twelve months as of Q3 2023. Despite the recent price target reduction by RBC Capital, Surgery Partners has shown a robust revenue growth of 9.96% over the same period.
InvestingPro Tips highlight that while the stock is currently trading near its 52-week low and has experienced significant volatility, analysts predict the company will be profitable this year. This aligns with RBC Capital's maintained Outperform rating, suggesting potential upside despite recent market challenges.
It's worth noting that Surgery Partners does not pay a dividend to shareholders, which may be a consideration for income-focused investors. However, the company's focus on growth through organic expansion and acquisitions, as mentioned in the article, could potentially lead to long-term value creation.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Surgery Partners, providing a deeper understanding of the company's financial health and market position.
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