Tenet Healthcare (THC) PT Raised to $200 at Raymond James

Raymond James analyst John Ransom raised the price target on Tenet Healthcare (NYSE: THC) to $200.00 (from $185.00) while maintaining a Outperform rating.

The analyst comments "We reiterate our Outperform rating on shares of THC while raising our price target to $200 (~8x 2027 EBITDA ex-NCI) following 2Q25 results that exceeded expectations, as the company reported adj. EBITDA ex-NCI of $887M (RJ estimate: $758M) driven by a beat across both segments. The Hospital segment exceeded expectations with a reported adj. EBITDA ex-NCI of $584M (RJ: $474M) and so did the ASC segment with adj. EBITDA ex-NCI of $303M (RJ: $284M). Absent an out of period item ($79M DPP), hospital EBITDA ex-NCI would have been $505M, a $31M beat vs. our model. Management also raised its 2025 adj. EBITDA ex-NCI guidance by $365M calling for adj. EBITDA ex-NCI of $3,460-3,505M. Guidance implies 2H pre-NCI EBITDA of $2,186M vs. the Street at $2,010M. The stock move was a bit surprising today as it was down ~10% as we suspect investors honed in on the volume softness in the quarter with hospital AA’s only up +0.4% (RJ: +2.5%) while also lowering its FY AA guidance by 50 bp to 1.5-2.5%, although management chalked this up to its continued shift towards higher acuity services. ASC volumes were muted as well at -0.6% (RJ: +0.5%), continuing a trend over the last six quarters of relatively soft volumes. Additionally, we sense that some investors are potentially beginning to price in the fall-out within the ACA market into the stock following recent news at OSCR, ELV, CNC, and MOH and the implications on 2026 earnings. ACA exchange volumes grew +23% y/y and exchange revenue grew +28% y/y and now sits at 7% of total THC revenue (~$1.5B). We are now baking in a $90M ACA headwind into our model for 2026 which assumes that ACA revenue declines 20% at a 30% contribution margin which takes ~2.5 points out of 2026 EBITDA growth. Medicaid DPPs totaled ~$350M in the quarter (including the $79M out of period payment), and $675M in 1H25 and are on pace to be $1.1-1.2B for the year (roughly flat y/y) and ~33% of EBITDA ex-NCI, and any impacts to DPP’s were pushed out to 2028 in the reconciliation package. All that being said, we think this was quarter was strong and the stock move today is overdone with estimates moving higher and the stock now trading at 7.2x 2026 EBITDA ex-NCI. Our new price target of $200 is ~8x our new 2027 EBITDA ex-NCI estimate."

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