On Thursday, UBS upgraded shares of Enhabit Home Health & Hospice (NYSE:EHAB) from Sell to Neutral, maintaining a price target of $9.50. The adjustment follows Enhabit's recent performance, which has met expectations and provided clearer anticipated results. The company, which has struggled since its spin-off nearly two years ago, is now showing signs of stability.
Enhabit has undergone a shift in its payer mix, aligning more closely with peers such as Amedisys (NASDAQ:AMED). The company has increased its contracting with Medicare Advantage (MA) payers, both episodically and through innovative per-visit contracts that offer higher reimbursement rates. This strategic move has likely contributed to the firm's improved outlook.
The easing of labor pressures has also played a role in the more favorable view of Enhabit's prospects. The healthcare company is currently undergoing a strategic review, which may further influence its future direction and performance. The combination of these factors has led UBS to reassess the investment rating of Enhabit's stock.
Despite the upgrade, the price target for Enhabit's shares remains at $9.50. The maintained price target suggests that while the immediate outlook for the company has improved, UBS maintains a cautious stance on its long-term valuation.
Enhabit's adjustment in its business strategy and the subsequent upgrade by UBS could be of interest to investors monitoring the healthcare services sector.
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