Benchmark Reiterates Buy Rating on Select Medical Holdings (SEM)

Benchmark analyst Bill Sutherland reiterated a Buy rating and $21.00 price target on Select Medical Holdings (NYSE: SEM).

The analyst commented, "For 2Q, SEM reported essentially in-line results and reiterated FY25 guidance. Revenue in 2Q totalled $1.34B (in line) and AEBITDA was $125.4M (street $126M). Adj EPS was $0.32 (street $0.24) reflecting a lower effective tax rate and a 3% reduction in shares outstanding. We remain constructive on SEM’s outlook for the balance of this year and FY26. The midpoint of FY25 guidance implies AEBITDA growth for 3Q and 4Q of 8% and 11%, respectively. For FY26, we model 10% AEBITDA growth based on 5.5% revenue growth and 40 bps margin improvement driven by 1) positive rate updates for all three segments; 2) the further accretive impact of Inpatient Rehab (IRF), the most profitable segment, continuing to grow at a double digit pace; 3) a flattish y/y high-cost outlier patient threshold for LTACH; and 4) the initial positive margin impact of system upgrades in Outpatient Rehab (OR). The stock is cheap at a 4-turn discount to peers; we look for a rerating as AEBITDA growth resumes."

For an analyst ratings summary and ratings history on Select Medical Holdings click here. For more ratings news on Select Medical Holdings click here.

Shares of Select Medical Holdings closed at $12.57 yesterday.

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