Healthcare Services Group extends record post-earnings rally after UBS upgrade

Healthcare Services

24/04/2025 15:49

** Healthcare Services Group's HCSG.O shares up 5.2% to over four-month high of $12.82 on Thurs, adding to big pop in prior session, after UBS upgraded to 'buy' from 'neutral

** HCSG shares registered 29.5% gain on Weds, their largest daily pct gain on record, after housekeeping, dining and dietary services provider posted Q1 top and bottom-line beat

** UBS raised its PT by $3 to $15, implying 23% upside to stock's last close

** Co to benefit from improving nursing home industry, strong retention, new customer adds, and cross-selling opportunities, UBS wrote in note

** Nursing homes represent the majority of HCSG's overall business and is an industry recovering from pandemic-challenged environment, where occupancy rates fell into the 60-70% range, brokerage said

** However, occupancy rates have since rebounded to 80%, UBS added, and are expected to rise further

** UBS said HCSG's current valuation of 14x forward earnings vs stock's 5-yr avg of ~19x offers an attractive entry point

** With move on Thurs, stock up ~10.5% YTD vs ~13% decline in the S&P 600 Commercial & Professional Services index .SPSMCCS

(Lance Tupper is a Reuters market analyst. The views expressed are his own)

((lance.tupper@tr.com 1-646-279-6380))