Wells Fargo analyst Steve Baxter assigned a Buy rating on Tenet Healthcare (THC – Research Report) yesterday and set a price target of $105.00.
Steve Baxter has given his Buy rating due to a combination of factors involving Tenet Healthcare’s recent strategic transactions. The sale of two California hospitals to Adventist Health is highlighted as a particularly shrewd move, with the sale taking place at an attractive multiple of approximately 11.8 times EBITDA, which is expected to enhance shareholder equity value by roughly 2-2.5%. The transaction showcases Tenet Healthcare’s ability to realize significant value from its assets, surpassing the market’s valuation of the company’s hospital assets at lower multiples.
Additionally, the spin-off of Conifer Health Solutions into a strategic partnership with Adventist Health is viewed as a positive development, potentially adding substantial incremental EBITDA from revenue cycle management services. While the exact financial impact of the Conifer deal is yet to be fully clarified, the initial analysis suggests a promising upside. Baxter’s rating is also supported by the lack of antitrust concerns, as the hospitals being sold do not present competitive issues due to their geographic locations. Taken together, these strategic decisions by Tenet Healthcare indicate a solid path for value creation, underpinning Baxter’s optimistic Buy recommendation.
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Based on the recent corporate insider activity of 38 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of THC in relation to earlier this year.
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Tenet Healthcare (THC) Company Description:
Tenet Healthcare Corp. engages in the provision of health care services. Through its subsidiaries and affiliates, it owns and facilitates acute care hospitals, ambulatory surgery centers, diagnostic imaging centers, and related health care facilities. It operates through the following business segments: Hospital Operations and Other, Ambulatory Care, and Conifer. The Hospital Operations and Other segment comprises of acute care hospitals, ancillary outpatient facilities, urgent care centers, microhospitals and physician practices. The Ambulatory Care segment includes operations of USPI joint venture and the company’s nine Aspen facilities in the United Kingdom. The Conifer segment offers healthcare business process services in the areas of hospital and physician revenue cycle management and value-based care solutions to healthcare systems, as well as individual hospitals, physician practices, self-insured organizations, health plans, and other entities. The company was founded in 1975 and is headquartered in Dallas, TX.
Read More on THC:
- Tenet Healthcare Sells California Hospitals to Adventist Health
- Tenet Healthcare Announces Redemption of Senior Notes
- Tenet Healthcare price target raised to $105 from $98 at Wells Fargo
- Greenlight buys Alight, exits Southwestern in Q4
- Tenet Healthcare price target raised to $109 from $97 at RBC Capital
