What Happened?
Shares of healthcare company Surgery Partners (NASDAQ: SGRY) jumped 4.3% in the morning session after Bank of America Securities resumed coverage on the stock with a 'Buy' rating and a $28 price target.
The investment firm highlighted several reasons for its positive outlook. BofA pointed to strong market tailwinds for Ambulatory Surgery Centers (ASCs), which are healthcare facilities that perform surgeries without requiring an overnight hospital stay. The analysts also noted that the stock traded at a depressed valuation compared to its historical average. BofA believed the market incorrectly penalized Surgery Partners for its joint-venture business structures. The bank had previously suspended coverage in June after the company rejected a buyout offer from private equity firm Bain Capital.
After the initial pop the shares cooled down to $22.27, up 4.7% from previous close.
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What Is The Market Telling Us
Surgery Partners’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 12 days ago when the stock gained 3.3% on the news that an analyst at investment firm Benchmark reiterated a "Buy" rating and a $35 price target on the company's stock. The positive sentiment from the analyst comes after a period of volatility for the surgical facilities operator.
In June, the company announced it had concluded acquisition talks with private equity firm Bain Capital, opting to remain independent after determining the offer undervalued the company's potential. Despite the failed takeover, several analyst firms have maintained their positive outlooks, pointing to the company's growth prospects in the outpatient surgical care market.
Surgery Partners operates a large network of ambulatory surgery centers and surgical hospitals, a sector benefiting from the ongoing shift of medical procedures out of traditional hospital settings. The reiterated Buy rating suggests confidence in the company's standalone strategy and its ability to generate value for shareholders.
Surgery Partners is up 4.6% since the beginning of the year, but at $22.27 per share, it is still trading 33.9% below its 52-week high of $33.69 from August 2024. Investors who bought $1,000 worth of Surgery Partners’s shares 5 years ago would now be looking at an investment worth $1,437.
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