Tenet Healthcare Soars 72% YTD: But is the Rally Out of Breath?

Tenet Healthcare Corporation THC has been one of the standout performers in the healthcare space this year, delivering an impressive 71.8% year-to-date gain. That advance not only tops the broader hospital industry but also surpasses the S&P 500’s rally by a wide margin. Key peers have ridden the same positive wave; HCA Healthcare, Inc. HCA has jumped 69.3%, while Universal Health Services, Inc. UHS has risen 35.8%, yet Tenet’s outperformance remains clear.Tenet is still trading below its average analyst price target of $236.50, implying roughly 9.1% additional upside from recent levels. While the highest forecast sits at $260 and the most conservative at $167, the overall tone from analysts leans firmly positive.YTD Price Performance – THC, HCA, UHS, Industry & S&P 500 Image Source: Zacks Investment ResearchTHC’s Momentum Signals ConfidenceDemand for hospital services continues to accelerate as aging demographics and chronic conditions reshape the U.S. healthcare landscape. Tenet appears well-positioned to benefit from these long-term tailwinds. Its ongoing expansion through United Surgical Partners International is helping the company tighten its grip on a fragmented ambulatory care market and deepen its outpatient footprint.Tenet's strong third-quarter performance prompted management to lift its 2025 guidance. The company now expects net operating revenues between $21.15 billion and $21.35 billion, improving from the prior range of $20.95 billion to $21.25 billion. Its updated adjusted EBITDA outlook of $4.47-$4.57 billion also reflects improved confidence, rising from the earlier projection of $4.40-$4.54 billion.THC’s Growth EngineBy the end of the third quarter, Tenet held interests in 530 ambulatory surgery centers and 26 surgical hospitals. This network gives the company broad exposure to one of the fastest-growing and profitable segments of healthcare delivery. Outpatient care provides higher margins, faster throughput, and reduced sensitivity to inpatient reimbursement pressures, key advantages during regulatory shifts.The company is also putting meaningful capital behind AI-powered clinical and administrative tools. These investments are intended to streamline operations, cut costs, reduce patient wait times and enhance care experiences. As hospital systems nationwide recover from labor shortages and rising expense trends, Tenet’s efficiency-first strategy may prove especially valuable.Tenet continues to refine its portfolio through targeted divestitures of non-core or underperforming assets, allowing it to redirect capital toward higher-return initiatives. Its return on equity of 25.1% exceeds the industry average of 24.4%, underscoring the effectiveness of this approach. The balance sheet also shows notable strength: net debt to capital stands at 53.8%, well below the industry average of 67.4%. With $3 billion in cash and equivalents, the company can comfortably cover the current portion of long-term debt, which sits at just $85 million.Estimates Are Moving in Tenet’s FavorReflecting the positive sentiment around Tenet, the Zacks Consensus Estimate for earnings per share has seen multiple upward revisions. The consensus estimate for 2025 adjusted earnings for THC is currently pegged at $16.18 per share, indicating a 36.2% year-over-year surge. The consensus mark for 2026 suggests a further 3.1% jump. It beat earnings estimates in each of the past four quarters, with an average surprise of 27.6%. The consensus estimate for 2025 and 2026 revenues suggests 2.9% and 4.7% year-over-year growth, respectively.Tenet Healthcare Corporation Price, Consensus and EPS Surprise Tenet Healthcare Corporation price-consensus-eps-surprise-chart | Tenet Healthcare Corporation QuoteKey Risks to ConsiderWith its strong performance, Tenet’s valuation has become somewhat stretched. Its forward 12-month P/E of 13.04X sits above its five-year median of 12.09X and is higher than the industry average of 11.82X. For comparison, HCA Healthcare trades at 17.24X and Universal Health Services at 10.45X, placing THC somewhere in between. Image Source: Zacks Investment ResearchMoreover, potential shifts to the Affordable Care Act or Medicaid reimbursement cuts remain meaningful risks, as both could weigh on margins.Bottom LineTenet Healthcare’s strong execution, upgraded outlook and expanding outpatient network reinforce its long-term potential, while consistent estimate revisions highlight sustained confidence in its earnings trajectory. However, its elevated valuation and policy-related reimbursement risks introduce a layer of caution. With upside still visible but more balanced than earlier in the year, THC currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Universal Health Services, Inc. (UHS): Free Stock Analysis Report Tenet Healthcare Corporation (THC): Free Stock Analysis Report HCA Healthcare, Inc. (HCA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks