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Encompass Health Receives Strong Buy Rating and Price Target Increase After Impressive Q4 Earnings

By Don Francis, Editor
February 10, 2024 8:04 AM UTC
Encompass Health Receives Strong Buy Rating and Price Target Increase After Impressive Q4 Earnings

Truist Securities's David S Macdonald raised their price target on Encompass Health (NYSE: EHC) by 4.9% from $82 to $86 on 2024/02/10. The analyst maintained their Strong Buy rating on the stock.

Macdonald's price target increase came in response to Encompass Health's strong fourth-quarter and full-year 2023 earnings report, which was released on February 5, 2024. The analyst highlighted the company's revenue and EBITDA beats, ongoing labor improvement, and robust demand/volume trends as the catalysts for the price target increase. Macdonald also noted that Encompass Health's cash flow remains robust, supporting its rapid expansion activities.

Encompass Health's fourth-quarter 2023 earnings were impressive, with an EPS of $0.95, beating the Zacks Consensus Estimate of $0.83 and showing an 8% increase compared to the same quarter in 2022. The company's revenue for the quarter stood at $1.25 billion, surpassing the Zacks Consensus Estimate of $1.24 billion and reflecting a 9.6% increase from the previous year's quarter.

For the full year 2023, Encompass Health reported an EPS of $3.64, which surpassed the previous year's EPS of $2.85 by 27.7%. The company's revenue for the year amounted to $4.8 billion, representing a 10.4% increase from the previous year.

Looking ahead to fiscal year 2024, Encompass Health's management provided guidance of an EPS range of $3.77 to $4.06 and projected revenue between $5.2 billion and $5.3 billion. The company's President and CEO, Mark Tarr, expressed optimism about the long-term prospects of the business, citing strong discharge growth and the validation of their value proposition and operating strategy.

Mizuho analyst Ann Hynes also issued an update on Encompass Health on February 9, 2024. Hynes raised the price target by 6.5% from $77 to $82 and maintained a Strong Buy rating on the stock.

Encompass Health currently enjoys favorable analyst sentiment, with 100% of top-rated analysts rating it as a Strong Buy or Buy. No analysts recommend holding the stock, and none recommend or strongly recommend selling it.

The consensus forecast among analysts is that Encompass Health will deliver earnings per share (EPS) of $3.5 for the upcoming year. If the analysts' projections prove accurate, this would represent a 1.1% decrease in EPS compared to the previous year.

Since the release of Encompass Health's quarterly report on February 5, 2024, the stock price has increased by 1.5%. Year-over-year, the stock has seen a 20% increase. However, during this period, Encompass Health has slightly trailed the S&P 500, which recorded a 23.2% increase.

Truist Securities analyst David S Macdonald has earned a strong reputation, ranking in the top 12% out of 4,470 Wall Street analysts according to WallStreetZen. With an average return of 8.9% and a win rate of 66.3%, Macdonald specializes in the Consumer Defensive and Healthcare 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 and based in Birmingham, AL, continues to expand its operations driven by strong financial performance and industry demand.

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