A Look At Universal Health Services (UHS) Valuation After Recent Share Price Momentum

Why Universal Health Services is on investors’ radar today

Universal Health Services (UHS) has drawn fresh attention after a period of solid recent returns, with the stock up 0.3% over the past day and 7.4% over the past week.

That short term move comes alongside gains of 17.5% over the past month and 3.7% over the past 3 months. These moves are prompting investors to look more closely at what they are paying for the company’s earnings and cash flows.

See our latest analysis for Universal Health Services.

Looking beyond the recent spike, Universal Health Services’ 1 month share price return of 17.5% and 1 year total shareholder return of 29.9% indicate momentum has been building rather than fading around the current US$234.81 share price.

If strong interest in healthcare providers has your attention, it could be a good moment to see what else is moving and check out 25 healthcare AI stocks as a fresh set of ideas.

With UHS reporting annual revenue of US$16.99b and net income of US$1.38b, plus a high value score and a large gap to one intrinsic value estimate, the key question is whether there is still a buying opportunity here or if the market is already pricing in future growth.

Most Popular Narrative: 6.2% Undervalued

Universal Health Services’ most followed narrative pegs fair value at about $250.41 per share, a touch above the last close of $234.81. This puts the focus squarely on how future earnings and cash flows are being modeled.

The company's aggressive buildout of outpatient behavioral health facilities positions it to capture a greater share of rising demand for mental and behavioral health services, a trend driven by increased societal awareness and destigmatization, which is expected to support long-term revenue and EBITDA growth as the mix shifts toward higher-margin, lower-cost care settings.

Ongoing investments in digital health, technology, and AI are expected to drive operating efficiencies and productivity, particularly in revenue cycle management and post-discharge care. This is expected to lead to sustained improvements in net margins and cost containment even in the face of reimbursement and labor challenges.

Read the complete narrative.

Curious what kind of revenue path and margin profile sit behind that fair value line, and how long earnings growth and buybacks are expected to support it, the full narrative lays out the assumptions that connect today’s price to those projections.

Result: Fair Value of $250.41 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still policy and reimbursement risks around Medicaid and ACA subsidies, as well as ongoing labor shortages, that could challenge those fair value assumptions.

Find out about the key risks to this Universal Health Services narrative.

Build Your Own Universal Health Services Narrative

If you see the story differently, or simply prefer to test the numbers yourself, you can pull the data, set your own assumptions and Do it your way in just a few minutes.

A great starting point for your Universal Health Services research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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