3 Key Points Behind Surgery Partners (SGRY) PT Being Raised to $48 at Jefferies

Jefferies analyst Brian Tanquilut raised the price target on Surgery Partners (NASDAQ: SGRY) to $48.00 (from $28.50) on the belief that it's one of the key beneficiaries of the emerging shift in surgical procedures out of hospitals into outpatient settings. This would translate to NT growth acceleration both organically and and M&A. The analyst cites 3 key points to the thesis:

• The bull thesis is driven by the belief that ASCs capable of performing joint replacements or more complex Cardiology procedures will see growth acceleration in the next 5 yrs as up to $60B of current inpatient spend shifts to outpatient settings.
• MSK and Cardio represent ~60% of the spend expected to shift to ASCs, making SGRY's leading position in ortho and growing cardio capabilities a differentiating factor that should translate to share gains and accelerating growth.
• Management provided a more precise outlook for LT growth with detailed expectations for 10-16% annual EBITDA growth over the next several years that the analyst deems achievable, if not conservative.

The analyst reiterated a Buy rating stating "Mgmt's recent detailing of LT growth guidance at 10-16% makes the stock compelling at 16x EBITDA, and their pre-release of strong Q4 results and above-Street FY21 guidance has also derisked the stock's NT outlook."

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