Baird analyst Andrew Wittmann has revised the price target for Healthcare Services Group (HCSG, Financial), moving it up from $12 to $13. The adjustment follows the company's first-quarter performance, which has shown promising signs of progress.
Despite the increase in the price target, Baird maintains a Neutral rating on HCSG shares. The updated analysis reflects the current trajectory and improved outlook post the latest quarterly results. This positive movement hints at a potential upward trend for HCSG as the company continues to align with its strategic goals.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 4 analysts, the average target price for Healthcare Services Group Inc (HCSG, Financial) is $13.75 with a high estimate of $17.00 and a low estimate of $12.00. The average target implies an upside of 12.80% from the current price of $12.19. More detailed estimate data can be found on the Healthcare Services Group Inc (HCSG) Forecast page.
Based on the consensus recommendation from 5 brokerage firms, Healthcare Services Group Inc's (HCSG, Financial) average brokerage recommendation is currently 2.8, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Healthcare Services Group Inc (HCSG, Financial) in one year is $13.39, suggesting a upside of 9.84% from the current price of $12.19. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Healthcare Services Group Inc (HCSG) Summary page.
HCSG Key Business Developments
Release Date: April 23, 2025
- Revenue: $447.7 million, an increase of 5.7% over the prior year.
- Net Income: $17.2 million.
- Diluted EPS: $0.23 per share.
- Cash Flow from Operations: $32.1 million, an increase of $41.3 million over the prior year.
- Environmental Services Revenue: $196.3 million with a margin of 10.8%.
- Dietary Services Revenue: $251.3 million with a margin of 7.6%.
- Cost of Services: $379.7 million or 84.8% of revenue.
- SG&A Expenses: $46.4 million or 10.4% of revenue.
- Cash and Marketable Securities: $143.9 million.
- Days Sales Outstanding (DSO): 78 days, improved from 88 days in Q1 2024.
- Share Repurchases: Approximately $7 million repurchased in Q1, totaling $23 million since February 2023.
- Acquisition Impact: Recent acquisition expected to contribute about 1% to 2025 revenue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- First quarter revenue and cash flows were the best in five years, indicating strong financial performance.
- Revenue increased by 5.7% over the prior year, reaching $447.7 million.
- Net income and diluted EPS were reported at $17.2 million and $0.23, respectively.
- The company successfully reduced Days Sales Outstanding (DSO) from 88 days to 78 days, improving cash collection efficiency.
- Healthcare Services Group Inc (HCSG, Financial) made a strategic acquisition, contributing to revenue growth and marking its first acquisition since late 2021.
Negative Points
- Cost of services was high at 84.8%, with a goal to manage it in the 86% range, indicating ongoing cost management challenges.
- SG&A expenses were reported at $45 million, with a longer-term goal to reduce these costs to the 8.5% to 9.5% range.
- Food inflation continues to be a concern, with food at home inflation increasing sequentially.
- The company faces challenges in certain markets with ongoing labor shortages, despite overall improvements in workforce availability.
- Revenue guidance for Q2 suggests only a small increase, indicating potential challenges in achieving significant sequential growth.
