RBC Sees Limited Exposure to Medicaid Risks for Tenet (THC), Reiterated $189 Target

Tenet Healthcare Corporation (NYSE:THC) is one of the 20 undervalued momentum stocks that are taking off. On June 11, RBC Capital analyst Ben Hendrix reiterated a Buy rating on Tenet Healthcare (THC), maintaining a price target of $189. The reaffirmation follows recent volatility in hospital stocks triggered by a White House memo regarding Medicaid supplemental payment programs.

While the memo raised concerns, particularly around potential reductions in state-directed payments, Hendrix views the market reaction as overdone. He notes that the language in the memo aligns with that in the current budget bill that allow for the continuation, or “grandfathering,” of existing programs. Therefore, in his view, the memo does not introduce any new or material headwinds for hospital earnings.

A successful healthcare provider smiling confidently in a modern hospital facility.

Hendrix sees the pullback in hospital names as a buying opportunity, especially for acute care providers like HCA Healthcare, Community Health, Ardent Health, and, notably, Tenet. He believes Tenet is well-positioned due to its relatively lower exposure to the Medicaid-directed payment programs that have come under scrutiny. This could help the company remain insulated, and do relatively better compared to its peers.

Therefore, Tenet remains the analyst’s top pick in the hospital sector. He believes that the recent weakness in the stock offers a more attractive entry point for long-term investors.

Tenet Healthcare Corporation (NYSE:THC) is a diversified healthcare services company that operates a nationwide care delivery network, including ambulatory surgery centers, surgical hospitals, and a national portfolio of acute care and specialty hospitals.

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