Tenet Healthcare (THC): Exploring Valuation After Analyst Upgrades and New Buyback Plans

Tenet Healthcare (THC) has been gaining attention after a wave of upbeat analyst sentiment. This increased interest is driven by expectations of much higher earnings next quarter, more optimistic earnings estimates, and fresh buyback activity.

See our latest analysis for Tenet Healthcare.

Tenet Healthcare has been riding a wave of momentum after strong analyst ratings and a new buyback plan, and that optimism is showing in the numbers. The stock’s total shareholder return over the past year is up 33%. Signs of building momentum can be seen in the positive performance of the last quarter and year-to-date. This run, paired with investor anticipation for the upcoming earnings, speaks to both renewed growth potential and improving confidence in the company’s valuation.

If you’re interested in other health sector movers gaining attention for their fundamentals and outlook, check out See the full list for free.

The question now is whether Tenet Healthcare’s strong track record and glowing analyst outlook mean the stock is still undervalued, or if the market has already priced in all its potential upside for investors.

Most Popular Narrative: Fairly Valued

Tenet Healthcare’s last close of $203 is almost in line with the narrative’s fair value of $199.48, signaling that analysts see little room for significant price movement in either direction right now.

Ongoing expansion of Tenet's ambulatory surgical center (USPI) footprint and consistent M&A activity in high-margin, high-acuity outpatient procedures (e.g., total joint replacements, spine surgery) are capitalizing on the industry shift towards outpatient care. This supports both revenue growth and future net margin expansion, due to favorable case mix and operational scale.

Read the complete narrative.

Curious about which growth assumptions drive this verdict? The narrative is built on big projections for revenue, profits, and declining margins. But the most provocative part is that it’s betting on ongoing share reductions and an earnings multiple usually seen only in the hottest industries. Want to know how much conviction is baked into those numbers? The answer might surprise you.

Result: Fair Value of $199.48 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still risks, including possible cuts to ACA subsidies or regulatory shifts impacting Medicaid, that could quickly change the outlook for Tenet Healthcare.

Find out about the key risks to this Tenet Healthcare narrative.

Another View: What Does the SWS DCF Model Say?

Interestingly, while analysts place Tenet Healthcare close to their fair value based on earnings multiples, our DCF model paints a radically different picture. According to this cash flow-based approach, the stock is trading at a 48% discount to its fair value. This suggests far more upside than most expect. Is the market missing something about Tenet’s future cash generation, or are DCF assumptions simply too optimistic?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Tenet Healthcare Narrative

If you want to dig into the details yourself or think you can spot a different story in the numbers, it’s easy to craft your own in just a few minutes: Do it your way

A great starting point for your Tenet Healthcare research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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