HCSG - Healthcare Services Group upgraded at Jefferies citing end-market potential

2023-03-24 10:08:23 ET

Jefferies upgraded the hospital maintenance company Healthcare Services Group ( NASDAQ: HCSG ) on Friday, arguing that the fundamentals in the nursing home (SNF) end-market has bottomed out.

Following an analysis of the SNF market, analyst Brian Tanquilut wrote: "….the emerging improvement in SNF occupancy (though still below pre-COVID levels) should translate to operating and financial gains for the company that we believe limits the stock's downside."

However, Tanquilut only upgrades the stock to Hold from Underperform, arguing that HCSG's recent decision to suspend dividend payments will likely drive near-term fund rotation and leave minimal room for multiple expansion.

Healthcare Services ( HCSG ) suspended quarterly cash dividends and authorized up to 7.5M share buybacks in February, citing the need to achieve financial flexibility and capital reallocation purposes, which led RBC Capital Markets to upgrade its shares to Outperform.

Read: Seeking Alpha contributor Gary Bourgeault issued a Hold rating on HCSG in January, arguing that the company will unlikely return to sustainable growth anytime soon.

For further details see: