Tenet Healthcare Stock In Focus After Analyst Downgrade: Retail Cautious

Shares of Tenet Healthcare Corp. ($THC) were down on Monday afternoon following a downgrade by Wells Fargo, with retail sentiment turning cautious.

Wells Fargo analyst Stephen Baxter revised down the firm’s rating to ‘Equal Weight’ from ‘Overweight’ and its price target to $150 from $205. While Raymond James downgraded its rating to ‘Outperform’ from ‘Strong Buy’ with an unchanged price target of $195.

Wells Fargo based its decision to cut the ratings on ongoing fiscal uncertainty and assumptions that the “enhanced exchange subsidies” in the sector will expire given the US presidential election results in favor of Republicans.

“Assuming the expiration of enhanced subsidies was a 50% probability before the election and a 100% probability now, the group multiples are little changed since the election,” The Fly.com reported, citing the Wells Fargo analyst, adding the firm expects "uncertainty to remain high for some time."

While Raymond James expects a reduction in the “Affordable Care Act exchange population in 2026 "due to the sunsetting of enhanced subsidies," the Fly added.

The firm cited other risks such as “explosive growth in state-directed payments,” potential cuts in Medicaid, and re-emergence of the site-neutral debate.

Retail sentiment on the stock has turned ‘neutral’ (47/100) from extremely bullish (86/100) a month ago.

Tenet sentiment meter and message volumes on Nov 25 as of 3:30 pm ET| Source: Stocktwits

Tenet’s adjusted diluted earnings per share came in at $2.93 in the third quarter 2024, beating consensus estimates.

"Our businesses continue to produce strong results and generate robust free cash flow with same store revenue growth and profitability well above our expectations due to the focused execution of our strategy and disciplined operations," Saum Sutaria, Tenet’s chairman and CEO said at the time of its last quarterly earnings. "We have furthered our portfolio transformation and are well-positioned to deliver enhanced value to our patients, physician partners, and shareholders."

Tenet’s stock is up 89% year-to-date.

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