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Universal Health Services Inc.

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Universal Health’s robust inorganic growth has substantially contributed to strong revenue generation. Moreover, the U.S healthcare industry offers immense untapped opportunities given the rising numbers of baby boomers. Also, solid Acute-care Platform continues to perform well. However, its second-quarter 2017 earnings have missed the Zacks Consensus Estimate and remained flat year over year. Universal Health has also lowered its 2017 EPS guidance following the poor second-quarter results. The company is exposed to integration risks owing to several acquisitions. Further, its highly leveraged balance sheet is a major headwind. The company is also expected to witness margin contraction at both acute care and behavioral hospitals. Well reflective of the headwinds, over last one year, the company’s shares have significantly underperformed the broader industry.

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