- RBC Capital Markets views Tenet Healthcare Corp's (NYSE:THC) Q1 earnings in-line with expectations reflecting solid execution and labor cost management amid January omicron headwinds.
- The analysts have raised the price target from $89 to $104 (41% upside) with an Outperform rating.
- Against an increasingly difficult labor backdrop characterized by high agency utilization, Tenet could hold salary and wage costs flat Y/Y as a percentage of revenue.
- Analysts estimate that the consolidated EBTIDA margin expanded ~110 bps Y/Y on a comparable adjusted basis.
- Though omicron drove a modest decline in hospital-adjusted admissions Y/Y, the analysts say they are impressed by the rapid improvement of operating KPIs following the swift abatement of omicron in February, demonstrating the flexibility and responsiveness of THC's data and analytic backed operating platform.
- Despite uncertainties of COVID recovery and a challenging labor backdrop, management reaffirmed its initial full-year guidance.
- RBC views the added conservatism as prudent this early in a year transitioning out of COVID. It believes THC's momentum heading into the second quarter points to clearer skies on the horizon.
- Price Action: THC shares are down 14.86% at $73.80 during the market session on the last check Friday.
