UHS

Based on a comprehensive review, Universal Health Services (UHS) presents a compelling case for a buy recommendation at its current level. Fundamentally, the company is solid, demonstrating strong revenue growth, robust profitability with a 90%+ gross margin, and a manageable debt level. The stock appears significantly undervalued based on key metrics like its P/E ratio near 9 and P/S ratio below 1.0, trading at a notable discount. While the technical picture shows recent weakness that has pushed the stock toward oversold levels, this pullback, combined with its value characteristics and strong operational base, creates a potential entry point for investors seeking a reasonably priced company in the healthcare sector.

RockFlow Model Forecast: Three Scenarios for 2026

Of course. Here is a 12-month outlook for Universal Health Services (UHS):

Outlook: Positive / Cautiously Bullish

The outlook for UHS is positive, with key catalysts including the resolution of staffing cost pressures, leading to improved margins, and consistent demand for its essential behavioral health and acute care services. Potential risks involve a resurgence in labor inflation, regulatory changes affecting reimbursement rates, and any broader economic downturn impacting patient volumes. While a specific analyst consensus target isn't provided, the stock's significant undervaluation compared to its own history and the sector suggests a compelling opportunity; a realistic 12-month price appreciation target could range toward the $230-$250 area, contingent on successful execution on margin improvement.

Wall Street Consensus

Most Wall Street analysts are optimistic about UHS's 12-month outlook, with consensus target around $199.22, indicating expected upside potential.

Overall, UHS has investment potential but also faces challenges. Here are key factors to weigh before investing.

OfExcellent. Here is the technical analysis of UHS's price performance.

1. Overall Assessment

UHS is exhibiting significant short-term weakness, having declined over 10% in the past month, which has effectively erased its modest gains from the preceding quarter.

2. Short-term Performance

The stock has experienced a pronounced sell-off over the past month, plummeting -10.14%. While its three-month performance is nearly flat at +0.1%, this reflects a dramatic reversal from a stronger position. Despite this recent downturn, UHS has still marginally outperformed the broader market by 3.27% over the three-month period, suggesting some relative resilience.

3. Current Position

Trading at $201.81, UHS is positioned in the lower-middle portion of its 52-week range ($152.33 to $246.33), approximately 47% above its low. Following the sharp monthly decline, the stock is approaching oversold territory, though its high beta of 1.28 indicates it is prone to greater volatility than the market. The significant 52-week drawdown of -21.72% underscores the substantial downside pressure experienced over the past year.

Of course. Here is a fundamental analysis of Universal Health Services, Inc. (UHS) based on the provided data.

**1. Revenue & Profitability**

UHS demonstrates strong top-line growth, with quarterly revenue increasing from $4.28 billion to $4.50 billion sequentially. Profitability is robust, with a high gross profit margin of approximately 90.8%, indicating efficient cost control relative to revenue. The net income margin improved to 8.3%, and both operating and pre-tax profit margins remained healthy at around 11.6% and 11.1%, respectively, signaling consistent operational earnings power.

**2. Financial Health**

The company maintains a moderate debt level, with a debt-to-equity ratio of 0.71, suggesting a balanced use of leverage. Financial stability is supported by a strong interest coverage ratio of 13.6, indicating ample earnings to service debt obligations. The current ratio is just above 1.0, reflecting adequate, though not excessive, short-term liquidity.

**3. Operational Efficiency**

Operational efficiency is mixed. The return on equity (ROE) is a modest 5.16%, which is relatively low. However, the asset turnover ratio of 0.29 suggests the company generates a lower level of sales from its asset base, which may be characteristic of its capital-intensive healthcare operations. The high days sales outstanding (DSO) of nearly 52 days points to a slower collection of receivables, an area for potential improvement in working capital management.

Valuation Level

UHS appears fundamentally undervalued based on its current ratios. The trailing P/E of 9.0 and forward P/E of approximately 8.8 are very low, suggesting the market has priced in minimal growth expectations. This is further supported by a Price-to-Sales (P/S) ratio of 0.74 and a Price-to-Book (P/B) ratio of 1.74, indicating the stock is trading at a discount to its own sales and book value. However, the high EV/EBITDA of nearly 26 implies that when debt is considered, the valuation is significantly richer, which could be a point of concern regarding the company's capital structure. The PEG ratio above 1.5 suggests the stock is not cheap relative to its earnings growth rate.

Peer Comparison

A direct comparison against specific industry averages is not possible due to the lack of provided peer data. Nevertheless, UHS's single-digit P/E ratios are typically characteristic of value stocks and would likely be low compared to broader market averages. The P/S ratio below 1.0 is notably attractive and would generally be considered low for most industries, potentially indicating undervaluation unless the sector is characterized by exceptionally thin profit margins. A conclusive assessment of its relative value requires the specific industry benchmark data for context.

Volatility Risk: With a Beta of 1.284, UHS exhibits higher volatility than the broader market, suggesting its price is more sensitive to market swings. This is corroborated by a significant one-year maximum drawdown of -21.72%, indicating substantial downside risk during recent adverse market conditions.

Other Risks: The absence of notable short interest suggests a lack of significant speculative bets against the stock, which is a modest positive. However, other factors including liquidity, industry-specific regulatory changes, or economic cycles affecting the healthcare sector remain primary risk considerations.