HCA - HCA Healthcare: Demand Recovery And Widening Margins Turns Stock Attractive (Upgrade)

2024-05-31 11:55:54 ET

Summary

• HCA Healthcare's stock has performed well, rising 26% in the past year, and with more confidence in the outlook, I am returning to a "buy" rating.
• The company's Q1 results showed strong revenue growth and rising demand, leading to a healthy margin environment.
• HCA is benefiting from a better payer mix, cost control measures, and accelerating hospital pricing, which is exceeding expectations and should persist into 2025.

Shares of HCA Healthcare ( HCA ) have been a solid performer over the past year, rising about 26% as margins have recovered from COVID-related pressures and headwinds from a poor acquisition have faded. I last covered HCA in February , when I downgraded shares from a “buy” to “hold,” which may have been a bit premature, given the stock has rallied a further 6% vs the market’s 3% gain. Given how strong results have been, I believe my valuation metrics may have been too conservative and am returning HCA to a buy....

For further details see: