UHS Stock Forecast & Price Target

Universal Health Services Inc. has demonstrated substantial improvement in its financial metrics, with the Acute Care Hospital Services segment achieving a significant 190 basis points expansion in the adjusted EBITDA margin, now at 15.8%. Additionally, the Behavioral Health Services segment exhibited a robust revenue growth of 9.3%, complemented by signs of increasing patient activity due to a 1.3% year-over-year growth in adjusted patient days. Furthermore, anticipated programs pending CMS approval are expected to generate an estimated benefit of $75-80 million, while the overall outlook for 2026 remains favorable with strong pricing power, suggesting potential revenue growth that outpaces costs.

The financial outlook for Universal Health Services Inc. remains negative due to anticipated volume and margin headwinds that are expected to result in earnings approximately 5% below current estimates, alongside a projected enterprise multiple consistent with trough levels seen in 2024. Additionally, the company has adjusted its long-term growth outlook downward for behavioral health volumes to a range of 2-3%, with a further forecast indicating a significant decline in DPP contributions expected to impact EBITDA by $420-470 million from 2028 to 2032. The tightening supply of clinical labor poses an additional risk, which could adversely affect productivity and margins, especially in urban settings where competition for employment opportunities is heightened.