Universal Health Services, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Last week saw the newest second-quarter earnings release from Universal Health Services, Inc. (NYSE:UHS), an important milestone in the company's journey to build a stronger business. Universal Health Services reported US$4.3b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$5.43 beat expectations, being 9.8% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Following the latest results, Universal Health Services' 17 analysts are now forecasting revenues of US$17.2b in 2025. This would be a reasonable 4.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 4.8% to US$20.51. In the lead-up to this report, the analysts had been modelling revenues of US$17.1b and earnings per share (EPS) of US$19.65 in 2025. So the consensus seems to have become somewhat more optimistic on Universal Health Services' earnings potential following these results.

View our latest analysis for Universal Health Services

The consensus price target was unchanged at US$223, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Universal Health Services analyst has a price target of US$280 per share, while the most pessimistic values it at US$165. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Universal Health Services shareholders.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Universal Health Services' rate of growth is expected to accelerate meaningfully, with the forecast 9.0% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 7.4% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.1% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Universal Health Services to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Universal Health Services following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Universal Health Services. Long-term earnings power is much more important than next year's profits. We have forecasts for Universal Health Services going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Universal Health Services that you need to take into consideration.

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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.