Concentra's High-Quality Business Model Attracts Analyst Attention, Initiates With Buy Rating

Concentra Group Holdings Parent, Inc. CON shares are trading higher today. Deutsche Bank analyst Justin Bowers initiated coverage on the stock with a Buy rating and a price target of $29.

The analyst writes that the stock could achieve a 20-30% IRR over the next 2-3 years, driven by continued execution and narrowing the discount to peers.

Concentra stands out as a high-quality healthcare services asset with mid-teens FCF per share growth potential, thanks to its scale, market dominance, top facility margins, and strong management execution, adds the analyst.

Bowers says that Concentra’s center-level margins significantly surpass peers’, and its inorganic growth is expected to accelerate, given its balance sheet strength and ability to execute M&A at low to mid-single-digit EBITDA multiples post-synergy.

The company generates high free cash flow (over 1x net income), facilitating rapid de-leveraging and robust reinvestment, adds the analyst.

The analyst estimates that the recent fee schedule increase in Florida will boost 2025 revenue by 1.4%-1.8%, enhancing the margin of safety for their 2025 estimate.

Price Action: CON shares are up 0.38% at $23.50 at the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image via Pixabay

Read Next:

• California Company Led By Ex-Police Officer-Turned- Cannabis CEO Could Pivot Into Hemp Space