5 Best Medical Stocks To Invest In

4. Tenet Healthcare Corporation (NYSE:THC)

Number of Hedge Fund Holders: 59

Tenet Healthcare Corporation (NYSE:THC) was founded in 1967 and is headquartered in Dallas, Texas. It operates as a diversified healthcare services company, with three primary segments – Hospital Operations, Ambulatory Care, and Conifer. On February 9, Tenet Healthcare Corporation (NYSE:THC) reported a Q4 Non-GAAP EPS of $1.96 and a revenue of $4.99 billion, outperforming Wall Street estimates by $0.73 and $50 million, respectively. 

Ann Hynes, an analyst at Mizuho, increased the price target on Tenet Healthcare Corporation (NYSE:THC) from $60 to $78 and maintained a Buy rating on the shares on February 17, following the Q4 results. The analyst believes that there is potential for estimates to be exceeded, due to a better-than-expected payer mix in acute care, a quicker recovery in the surgery center business, and positive trends in contract labor. In Hynes’ opinion, improving trends in the surgery center segment are crucial for Tenet Healthcare Corporation (NYSE:THC) to unlock multiple expansion. 

According to Insider Monkey’s fourth quarter database, 59 hedge funds were bullish on Tenet Healthcare Corporation (NYSE:THC), compared to 60 funds in the prior quarter. Larry Robbins’ Glenview Capital is the largest stakeholder of the company. 

Greenlight Capital made the following comment about Tenet Healthcare Corporation (NYSE:THC) in its Q4 2022 investor letter:

“Though we believe we are in the middle stages of a bear market, we did establish a new medium-sized long position in Tenet Healthcare Corporation (NYSE:THC) during the fourth quarter.

THC is an operator of hospitals and ambulatory surgery centers (ASC). In recent years, the company has grown and transitioned its business mix towards its higher-margin ASCs. This shift has enabled the company to generate significant, and what we believe to be sustainable, cash flows.

During 2022, the company lowered its guidance due to COVID and inflationary headwinds, resulting in its shares declining by more than 50% year-to-date through late October. We believe this pullback offered an attractive opportunity to participate in the company’s transformation, as we expect its ASC growth to remain strong and its now smaller hospital portfolio to improve from both a cost and volume perspective. We acquired our shares from late December through the beginning of January for an average price of $48.61, or 8.7x 2023 consensus earnings. THC recently announced and began its plan to repurchase about 20% of the outstanding shares by the end of 2024.”