Surgery Partners (SGRY) Stock Forecast & Price Target

Surgery Partners is one of the largest ASC platforms in the country, making it an attractive value proposition for the U.S. healthcare system as a low-cost care delivery alternative. The company has taken aggressive actions to flex its cost structure and implemented changes to address the safety of its patients, employees, and medical staff in response to the pandemic, indicating proactive management. Surgery Partners' expanding capabilities and focus on high efficiency demonstrate future growth potential and its environmental considerations, such as smaller, more energy-efficient facilities, are commendable.

Surgery Partners is facing sustainability-related issues in its workforce diversity and inclusion, potential risks to its rating and price target include dependence on managed care and Medicare rates, physician recruitment and retention, and labor cost inflation, and the company's current valuation is trading below that of peers. The recent divestiture of a facility in Idaho Falls is expected to improve cash conversion and lead to faster volume growth, but our outlook remains negative due to concerns about the company's ability to achieve long-term margin expansion and its reliance on high-acuity procedures.