Encompass Health (EHC) Receives Strong Buy Rating and Price Target Increase by Mizuho Analyst

Mizuho's Ann Hynes raised their price target on Encompass Health (NYSE: EHC) by 2.2% from $93 to $95 on April 25, 2024. The analyst maintained their Strong Buy rating on the stock. According to Hynes, Encompass Health had one of its "best quarterly performances ever" based on their assessment of the company's first-quarter 2024 print dated April 24, 2024.

Hynes highlighted several factors that contributed to their optimistic outlook on Encompass Health's visibility. These factors include robust fundamentals within the inpatient rehabilitation business, ongoing advancements in labor patterns, the implementation of a bed growth strategy, and the acquisition of other companies.

Encompass Health reported strong performance for the first quarter of 2024. The company's earnings per share (EPS) of $1.12 surpassed the Zacks Consensus Estimate of $0.93 and showed a 27.3% increase compared to the first quarter of 2023. Additionally, Encompass Health's revenue for Q1 2024 stood at $1.32 billion, beating the Zacks Consensus Estimate of $1.27 billion and registering a 13.4% increase compared to the same period last year. The company's EBITDA also showed positive growth, reaching $273 million, a 19.2% increase year-over-year.

Looking ahead, Encompass Health's management provided guidance for the full year of 2024. They expect EPS in the range of $3.86 to $4.11, revenue between $5.25 billion and $5.325 billion, and EBITDA ranging from $1.03 billion to $1.065 billion. Mark Tarr, President & CEO of Encompass Health, expressed satisfaction with the company's Q1 performance, highlighting revenue growth of 13.4% driven by strong discharge growth and prudent expense management, which contributed to a 19.2% growth in Adjusted EBITDA.

In light of Encompass Health's positive performance, Barclays analyst Andrew Mok also issued an update on April 25, 2024. Mok raised the price target for EHC by 6.9%, from $101 to $108, while maintaining a Strong Buy rating on the stock.

It is worth noting that all top-rated analysts currently rate Encompass Health as either a Strong Buy or Buy, with no analysts recommending a Hold or selling the stock. The consensus forecast among analysts is that Encompass Health's upcoming year will deliver earnings per share (EPS) of $3.5. If this forecast holds true, it would represent a slight decrease of 0.3% on a year-over-year basis.

Since Encompass Health's latest quarterly report on April 24, 2024, the stock price has experienced a slight decline of 0.1%. However, on a year-over-year basis, the stock has seen significant growth, with an increase of 30.6%. During this period, Encompass Health has outperformed the S&P 500, which has risen by 24%.

Mizuho analyst Ann Hynes, who raised Encompass Health's price target, is ranked in the top 8% out of 4,565 Wall Street analysts by WallStreetZen. With an average return of 8% and a win rate of 60.6%, Hynes specializes in the Consumer Defensive, Healthcare, and Communication Services sectors.

Encompass Health Corporation, formerly known as Amcare, Inc., offers facility-based and home-based post-acute services through a network of inpatient rehabilitation hospitals, home health agencies, and hospice agencies. The company, incorporated in 1984, is based in Birmingham, AL.

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