Wall Street Zen Downgrades Healthcare Services Group to Buy

Healthcare Services Group (NASDAQ:HCSG) received a downgrade from a “strong-buy” to a “buy” rating by equity analysts at Wall Street Zen, as reported on Friday. This adjustment reflects a shift in investor sentiment towards the company’s stock, which has seen varied evaluations from several other brokerages recently.

BMO Capital Markets initiated coverage on Healthcare Services Group on November 13, 2023, assigning a “market perform” rating along with a target price of $20.00. Meanwhile, UBS Group reaffirmed its “buy” rating on November 24, 2023. Weiss Ratings issued a “hold (C+)” rating on the stock on Tuesday. In contrast, Benchmark raised its target price from $19.00 to $24.00, giving the stock a “buy” rating on October 23, 2023. Macquarie also reiterated a “buy” rating for Healthcare Services Group.

Overall, three equity research analysts currently rate the stock as a Buy, while four have assigned a Hold rating. According to data from MarketBeat, the consensus rating is currently “Hold” with an average price target set at $19.40.

Recent Financial Performance

Healthcare Services Group reported its latest earnings results on October 22, 2023. The company posted earnings per share (EPS) of $0.23, exceeding analysts’ consensus estimate of $0.21 by $0.02. The company’s revenue for the quarter reached $464.34 million, surpassing the anticipated $460.36 million. Notably, Healthcare Services Group achieved a net margin of 2.20% and a return on equity of 12.23%. This marked an 8.5% year-over-year increase in revenue, compared to $0.19 EPS recorded during the same period last year. Looking ahead, the company has set its Q4 2025 guidance, projecting EPS figures that analysts expect to average $0.74 for the current year.

Institutional Investment Trends

Recent movements among institutional investors indicate increased interest in Healthcare Services Group. Trail Ridge Investment Advisors LLC raised its stake by 2.6% in the third quarter, now owning 24,309 shares valued at $409,000 after acquiring an additional 609 shares. Similarly, Amalgamated Bank increased its holdings by 3.4%, now possessing 21,563 shares valued at $363,000 after a purchase of 719 shares.

HSBC Holdings PLC also raised its stake by 1.7% in the first quarter, now holding 53,175 shares worth $539,000 after buying an additional 868 shares. Legal & General Group Plc increased its position by 0.5%, now owning 200,393 shares valued at $3.37 million following a purchase of 970 shares.

Glenmede Investment Management LP also boosted its holdings by 3.5%, acquiring an additional 1,016 shares, bringing its total to 29,689 shares valued at $500,000. Currently, 97.97% of Healthcare Services Group stock is held by hedge funds and other institutional investors.

Healthcare Services Group provides management, administrative, and operational services across various departments in nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States. The company operates through two segments: Housekeeping and Dietary. As the landscape of healthcare services continues to evolve, analysts and investors will closely monitor Healthcare Services Group’s performance and strategic direction.