Encompass Health Exceeds Expectations in Q4 2023, Forecasting Promising FY 2024

By Don Francis, Editor
February 10, 2024 7:32 AM UTC
Encompass Health Exceeds Expectations in Q4 2023, Forecasting Promising FY 2024

Mizuho's Ann Hynes raised their price target on Encompass Health (NYSE: EHC) by 6.5% from $77 to $82 on 2024/02/09. The analyst maintained their Strong Buy rating on the stock.

Encompass Health, a leading provider of facility-based and home-based post-acute services, has recently received positive attention from analysts after reporting strong financial results for the fourth quarter and fiscal year 2023. The company's growth visibility has been highlighted, with analysts pointing to strong fundamentals in the inpatient rehabilitation business, continued improvement in labor trends, and the company's bed expansion strategy and acquisition.

In its Q4 2023 report, Encompass Health exceeded expectations, reporting an EPS of $0.95, beating the Zacks Consensus Estimate of $0.83 and showing an 8% increase compared to Q4 2022's $0.88. Additionally, the company generated $1.25 billion in revenue, surpassing the Zacks Consensus Estimate of $1.24 billion and showing a 9.6% increase compared to Q4 2022's $1.14 billion.

For the full year 2023, Encompass Health reported an EPS of $3.64, marking a significant 27.7% increase compared to FY 2022's $2.85. The company's revenue for the fiscal year reached $4.8 billion, surpassing FY 2022's $4.35 billion by 10.4%.

Looking ahead to FY 2024, Encompass Health's management provided guidance of an EPS range between $3.77 and $4.06, with revenue projected to be in the range of $5.2 billion to $5.3 billion. President & CEO Mark Tarr expressed optimism about the company's future, highlighting the strong finish to 2023 and the validation of their value proposition and operating strategy.

Truist Securities analyst David S Macdonald also weighed in on Encompass Health on February 9th, raising the price target from $82 to $86, a 4.9% increase, while maintaining their Strong Buy rating on the stock.

The positive sentiment towards Encompass Health is reflected in the consensus among analysts, with 100% of top-rated analysts currently rating the stock as either a Strong Buy or Buy. Notably, no analysts recommend holding or selling the stock. However, the consensus forecast for the upcoming year suggests that Encompass Health's EPS will be $3.5, representing a 1.1% decline compared to the previous year.

In terms of stock performance, Encompass Health has shown resilience since its latest quarterly report on February 5th, with a 1.5% increase in stock price. Over the past year, the stock has experienced significant growth, rising by 20%. However, during this period, Encompass Health has slightly trailed behind the S&P 500, which has shown a 23.2% increase.

Analyst Ann Hynes from Mizuho, who raised Encompass Health's price target on February 9th, is ranked in the top 8% of Wall Street analysts by WallStreetZen. With an average return of 8.2% and a 64.8% win rate, Hynes specializes in the Consumer Defensive and Healthcare sectors.

Encompass Health Corporation, formerly known as Amcare, Inc., offers a comprehensive range of post-acute services through its network of inpatient rehabilitation hospitals, home health agencies, and hospice agencies. The company, incorporated in 1984 and based in Birmingham, AL, continues to strengthen its position in the healthcare industry with positive financial performance and a promising outlook.

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