Encompass Health Beats Expectations in Q1 2024, Analyst Raises Price Target

Raymond James's John Ransom raised their price target on Encompass Health (NYSE: EHC) by 11.8% from $85 to $95 on 2024/04/26. The analyst reiterated their Strong Buy rating on the stock.

Encompass Health, a leading provider of facility-based and home-based post-acute services, recently announced its financial results for the first quarter of 2024. The company reported earnings per share (EPS) of $1.12, beating the Zacks Consensus Estimate of $0.93 and showing a 27.3% increase compared to the first quarter of 2023. Additionally, Encompass Health reported revenue of $1.32 billion, exceeding the Zacks Consensus Estimate of $1.27 billion and showing a 13.4% increase year-over-year.

Following the strong quarterly performance, Encompass Health's management increased their full-year guidance for 2024. John Ransom, the Raymond James analyst, noted that although the outlook appears cautious, management explained the slight increase in expectations by attributing it to pre-opening costs and one-time events in the first quarter. For FY 2024, Encompass Health is now guiding for EPS of $3.86 to $4.11, revenue of $5.25 billion to $5.325 billion, and EBITDA of $1.03 billion to $1.065 billion.

President & CEO Mark Tarr expressed satisfaction with the company's Q1 performance, highlighting the revenue growth of 13.4% driven primarily by strong discharge growth and prudent expense management. Tarr further emphasized that Encompass Health's value proposition and operating strategy continue to be validated, instilling optimism about the long-term prospects of the business.

It is worth noting that all top-rated analysts currently rate Encompass Health as a Strong Buy or Buy, indicating a positive sentiment towards the stock. No analysts see it as a Hold, and there are no recommendations to sell the stock.

According to the consensus forecast among analysts, Encompass Health is expected to deliver earnings per share (EPS) of $3.5 in the upcoming year. If this forecast proves accurate, it would mean a slight decrease of 0.3% in EPS compared to the previous year.

Following the release of Encompass Health's quarterly report on April 24, 2024, the stock price has declined by 0.4%. However, when looking at the year-over-year performance, the stock has shown an impressive increase of 29.5%. During the same period, Encompass Health has outpaced the S&P 500, which has risen by 25.7%.

John Ransom, the analyst who raised the price target and reiterated the Strong Buy rating for Encompass Health, is ranked in the top 13% of Wall Street analysts according to WallStreetZen. Ransom specializes in the Industrials and Financial Services sectors, among others, and has an average return of 5.3% and a win rate of 52.4%.

Encompass Health Corporation, formerly known as Amcare, Inc., has been providing post-acute services through its network of inpatient rehabilitation hospitals, home health agencies, and hospice agencies since its incorporation in 1984. The company is headquartered in Birmingham, AL.

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