HCA Healthcare Is On Path To 'Multi-Year Margin Expansion': Bullish Analyst Shows Confidence

Cantor Fitzgerald initiated coverage on HCA Healthcare Inc HCA under a broader coverage of 15 companies in the Healthcare Services sector.
The analyst takes the price target of $304 with an Overweight rating.
The analyst writes that contract negotiating power could be crucial to margin expansion, which, in turn, could increase the importance of HCA's position as a market-share leader in the acute hospital space.
Cantor analyst writes that the company's well-capitalized balance sheet positions it to achieve market-share gains in 2023. It is viewed as a challenging environment for smaller hospitals affected by rising interest rates, labor inflation, and increasing technology investment needs.
Though today's HCA Q1 earnings demonstrated some easing of staffing issues, as it reported better-than-expected earnings.
Cantor says contract labor expenses could fall further in 2Q23.
The current 8.9x 2024E EV/EBITDA, a 4% discount to the stock's historical five-year average, reflects the challenges of the price-to-cost spread over 2021-23 and the runway of procedures shifting from acute to lower EBITDA per surgical case in outpatient settings.
The analyst says its price target reflects confidence in HCA's multi-year margin expansion.
Price Action: HCA shares are up 3.56% at $280.10 on the last check Friday.

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