Universal Health Services (NYSE: UHS) is
one of the largest for-profit hospital firms in the United States. It owns and operates acute care hospitals, behavioral health centers, surgical hospitals, ambulatory surgery centers, and radiation oncology centers across the country. The facilities provide general surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, pediatric care, pharmacy, and behavioral health services. Competitors include Community Health Systems (NYSE: CYH) and Tenant Healthcare (NYSE: THC).
The company pleased investors last week, when it reported Q4 EPS of 74 cents. That was four cents above the average Street estimate. Revenues of $1.19 billion effectively matched the analyst view. Management also guided FY08 EPS to $3.37-$3.42 ($3.37 consensus). Deutsche Securities subsequently reiterated its "buy" rating on the shares and boosted its price target to $63.
The stock
price popped through 200-day moving average resistance on the news and has since been consolidating the gain in a bullish "flag" pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Altogether, brokers recommend the issue with five "strong buys", seven "buys" and eight "holds". The UHS P/E ratio (17.05), Price to Sales ratio (0.59), Price to Book ratio (1.88) and Price to Cash Flow ratio (7.93) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 91% of the outstanding shares. Over the past 52 weeks, UHS has traded between $46.21 and $63.40. A stop-loss of $46.75 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
Top growth fund manager sours on Apple, U.S. tech
New Facebook share structure hints at IPO
Before the bell: Futures higher ahead of housing, jobless data
