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Universal Health (UHS) Up 26% in 6 Months: More Room to Run?

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Shares of Universal Health Services, Inc. (UHS - Free Report) have gained 26% in the past six months compared with the industry’s 20% increase. The Medical sector and the S&P 500 composite index have gained 0.04% and 3.1%, respectively, in the same time frame. With a market capitalization of $8.7 billion, the average volume of shares traded in the last three months was 0.7 million.

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Growing revenues, sound segmental performances, an expansive care network and a robust financial position continue to drive Universal Health.

The leading U.S. healthcare services provider with a current Zacks Rank #3 (Hold) has a decent track record of beating estimates in three of the trailing four quarters and missing the same once, the average beat being 0.17%.

Can UHS Retain the Momentum?

The Zacks Consensus Estimate for Universal Health’s 2023 earnings is pegged at $10.04 per share, indicating a 1.6% increase from the prior-year reported figure. Management expects the same to lie within $9.50-$10.50.

The consensus mark for revenues stands at $14.1 billion, suggesting a 5.2% increase from the year-ago number. Management anticipates the metric between $14.044 billion and $14.314 billion.

Solid contributions from Acute Care Hospital Services and Behavioral Health Care Services segments continue to drive top-line growth for Universal Health. The segments benefit on the back of improved patient admissions.

UHS makes prudent efforts to launch new service lines as well as upgrade the existing ones offered through its facilities, some of which include general and specialty surgery, internal medicine, obstetrics, emergency room care and radiology services.

Acquisitions pursued have expanded the bed count of its facilities as well as diversified the treatment network of the healthcare provider. These growth-related efforts also empower Universal Health to enter new markets and reach U.S. communities with inadequate access to care.

As of Feb 27, 2023, Universal Health’s portfolio includes 359 inpatient facilities and 39 outpatient and other facilities stretched throughout 39 states, Washington, D.C., the U.K. and Puerto Rico.

To pursue such uninterrupted business investments, a solid financial position is of utmost importance and that’s exactly the case with Universal Health. It boasts a solid cash balance, which is sufficient enough to service its short-term debt obligations. UHS generated operating cash flows of $996 million in 2022, which improved 12.7% year over year. A sound financial standing also paves way for the healthcare provider to tactically deploy capital through share repurchases and dividend payments.

Stocks to Consider

Some top-ranked stocks in the Medical space are Amphastar Pharmaceuticals, Inc. (AMPH - Free Report) , Novo Nordisk A/S (NVO - Free Report) and Henry Schein, Inc. (HSIC - Free Report) . While Amphastar Pharmaceuticals and Novo Nordisk currently sport a Zacks Rank #1 (Strong Buy), Henry Schein carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Amphastar Pharmaceuticals’ earnings surpassed the Zacks Consensus Estimate in three of the last four quarters and matched the mark once, the average beat being 34.99%. The Zacks Consensus Estimate for AMPH’s 2023 earnings suggests an improvement of 3.1%, while the same for revenues indicates growth of 9.4% from the respective year-ago reported figures.

The Zacks Consensus Estimate for AMPH’s 2023 earnings has moved 12.8% north in the past 30 days. Shares of Amphastar Pharmaceuticals have gained 29.7% in the past six months.

The bottom line of Novo Nordisk outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark once, the average being 3.00%. The Zacks Consensus Estimate for NVO’s 2023 earnings implies a rise of 28%, while the same for revenues indicates growth of 19.1% from the respective year-ago reported figures.

The Zacks Consensus Estimate for NVO’s 2023 earnings has moved 5.5% north in the past 60 days. Shares of Novo Nordisk have surged 40.5% in the past six months.

Henry Schein’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and matched the mark once, the average being 2.97%. The Zacks Consensus Estimate for HSIC’s 2023 earnings indicates a rise of 10.6%, while the same for revenues suggests an improvement of 1.6% from the corresponding year-ago reported estimates.

The Zacks Consensus Estimate for HSIC’s 2023 earnings has moved 6.8% north in the past 60 days. Shares of Henry Schein have gained 11.9% in the past six months.

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