Update shared on 13 Nov 2025
Fair value Increased 0.90%Encompass Health's analyst price target has increased by $1.25 to $140.33. This reflects analysts' expectations for sustained discharge growth and successful expansion strategies.
Analyst Commentary
Recent analyst updates reflect a positive outlook for Encompass Health, noting several factors that could drive further growth. However, some caution remains as challenges in strategy execution and market dynamics persist.
Bullish Takeaways
- Bullish analysts highlight successful execution of the de novo strategy, which targets expansion into new markets. This approach has potential for increased patient conversion rates.
- Sustained strong discharge growth is expected to support revenue and profitability improvements, which could bolster the company's valuation.
- Ongoing initiatives to improve conversion rates at both new and existing hospitals are seen as key drivers for future growth.
- Efforts to convert semi-private beds to private rooms could enhance patient satisfaction and operational efficiency. This may contribute positively to the long-term outlook.
Bearish Takeaways
- Bearish analysts caution that expansion into new markets may bring operational challenges and could slow the pace of conversion rate improvements.
- There are concerns about the scalability of the de novo strategy, as entering markets with historically low conversion rates may present unforeseen obstacles.
- Continued investment in facility upgrades and new market entry could pressure margins if anticipated growth does not materialize as expected.
What's in the News
- Opened Rehabilitation Hospital of Amarillo, a 50-bed inpatient rehabilitation facility in partnership with BSA Health System. The facility is now accepting patients (Strategic Alliances).
- Raised 2025 earnings guidance, expecting net operating revenue between $5.905 billion and $5.955 billion (Corporate Guidance, raised).
- Completed a share repurchase tranche from July 1 to September 30, 2025, buying back 221,301 shares for $24.94 million. This totals 7.82% of shares bought back since 2013 (Buyback Tranche Update).
- Opened the 25th Florida location, Encompass Health Rehabilitation Hospital of St. Petersburg, which provides specialized rehabilitation services in a 57,000-square-foot facility (Business Expansions).
- Launched the first Connecticut hospital, Encompass Health Rehabilitation Hospital of Danbury. This 40-bed facility caters to patients recovering from complex conditions (Business Expansions).
Valuation Changes
- Consensus Analyst Price Target has risen slightly from $139.08 to $140.33. This reflects modestly increased growth expectations.
- Discount Rate increased from 6.78% to 6.96%, indicating marginally higher estimates of risk or cost of capital applied in new forecasts.
- Revenue Growth expectations have declined from 8.14% to 7.82%. This signals a slightly more conservative outlook on future expansion.
- Net Profit Margin is projected to improve, increasing from 9.93% to 10.35%. This suggests analysts anticipate more efficient operations or margin enhancements.
- Future P/E ratio has decreased from 23.80x to 22.84x. This reflects a lower multiple being applied to forward earnings forecasts.
Disclaimer
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