THC - Tenet Healthcare: Asset Sales Current Multiples Support Re-Rating (Rating Upgrade)

2024-06-16 22:55:03 ET

Summary

• THC stock has rallied in 2024 due to management's sale of underperforming assets, unlocking capital for high return opportunities.
• Management's focus on acute surgery centers and redeploying funds is grounds for potential multiple expansion.
• Revised estimates show potential for THC to reach a valuation range of $220-$250 per share, supporting a buy rating.

Investment Summary

Since my last publication on Tenet Healthcare Corporation ( THC ) shares have caught a tremendous bid and now trade nearly 180% to the upside (Figure 1). The key catalyst to the repricing has been management's divestiture of lazy assets within the company's surgery centres portfolio. This has unlocked substantial capital on the balance sheet and provided it with new funds to deploy in high-return opportunities. Of course, this does not come without risk – it is now one of execution on management's part....

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