On Tuesday, Wolfe Research maintained a positive outlook on Tenet Healthcare Corporation (NYSE:THC), reiterating an Outperform rating and a price target of $178.00. The firm's assessment follows Tenet Healthcare's third-quarter results, which surpassed expectations with revenue reaching $5.12 billion, a year-over-year increase of 1.2%.
This performance was slightly above market projections. Adjusted EBITDA for the quarter stood at $978 million, marking a significant 14.5% rise from the previous year and exceeding Wolfe Research and consensus estimates by 6.3% and 5.6%, respectively.
The growth was attributed to robust same-store volume and revenue expansion within the hospital segment. In response to the strong results, Tenet Healthcare has uplifted its full-year 2024 guidance by $50 million at the midpoint, considering the core operations excluding the Alabama sale, to $3.95 billion from the earlier forecast of $3.9 billion. This revision reflects the company's outperformance in the hospital business, which had exceeded prior expectations.
Analysts are keen to discuss the factors contributing to the company's outperformance, as well as the components of the fourth-quarter guidance, which suggests a roughly 4% decrease at the midpoint when excluding the Alabama asset sale. Additionally, there is an interest in early insights regarding the potential challenges and opportunities for 2025.
It is anticipated that the EBITDA guidance for 2025 will likely remain flat year-over-year as the company fully accounts for the impact of asset sales. However, Tenet Healthcare's balance sheet shows approximately $3.0 billion in deployable cash, which could serve as a counterbalance.
Wolfe Research also addressed inquiries regarding the role of state payments in the third-quarter performance. The firm clarified that the quarter's success was not driven by such payments but rather by the core operations of the business.
In other recent news, Tenet Healthcare Corporation reported third-quarter earnings that exceeded analyst expectations, leading to an upward revision of its full-year outlook. The healthcare services firm posted adjusted earnings per share of $2.93, notably higher than the projected $2.35. Revenue for the quarter was $5.12 billion, surpassing the consensus estimate of $5.05 billion. This represents a year-over-year increase, with Consolidated Adjusted EBITDA for the quarter reaching $978 million, a 14.5% rise compared to the same period last year.
Particularly robust growth was seen in Tenet's Ambulatory Care segment, which reported Adjusted EBITDA of $439 million, an 18.6% increase over the third quarter of the previous year. Looking ahead, Tenet has raised its full-year 2024 Adjusted EBITDA outlook to a range of $3.9 billion to $4.0 billion, a $50 million increase from its prior guidance. For the fourth quarter, the company anticipates earnings per share to fall between $2.69 and $3.31.
In addition, Tenet provided full-year 2024 earnings per share guidance of $11.12 to $11.73, surpassing the consensus estimate of $10.74. However, the company's revenue guidance for both the fourth quarter and full-year 2024 fell slightly short of analyst expectations.
InvestingPro Insights
Tenet Healthcare's strong performance, as highlighted in the article, is further supported by real-time data from InvestingPro. The company's market capitalization stands at $14.78 billion, reflecting its significant presence in the healthcare sector. With a P/E ratio of 5.51, Tenet appears to be trading at a relatively low valuation compared to its earnings, which aligns with the article's mention of the company's outperformance and increased guidance.
InvestingPro Tips reveal that Tenet Healthcare has been aggressively buying back shares, indicating management's confidence in the company's future prospects. This strategy could potentially contribute to the improved earnings per share and overall shareholder value. Additionally, the company boasts a high shareholder yield, which complements the strong financial results discussed in the article.
It's worth noting that while Tenet has experienced a significant price uptick over the last six months, with a 40.69% total return, the stock has taken a hit over the last week, declining by 11.29%. This recent volatility could present an opportunity for investors considering the company's strong fundamentals and improved guidance.
For readers interested in a more comprehensive analysis, InvestingPro offers 11 additional tips for Tenet Healthcare, providing a deeper understanding of the company's financial health and market position.
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