What Happened?
Shares of hospital management company Universal Health Services (NYSE: UHS) fell 5.7% in the afternoon session after Chief Financial Officer Steve Filton noted during a recent conference that procedural volumes (an important driver of hospital revenue) "have been slower to recover back to historical levels than we might have imagined."
Filton also voiced concern over the Trump administration's proposed federal spending bill, particularly its implications for healthcare funding. Since UHS derives a significant portion of its revenue from government programs like Medicare and Medicaid, the anticipated cuts to Medicaid could significantly affect the company, especially in regions with high dependency on public healthcare funding.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Universal Health Services? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Universal Health Services’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 28 days ago when the stock gained 5.9% after the major indices popped (Nasdaq +3.4%, S&P 500 +2.5%) in response to the positive outcome of U.S.-China trade negotiations, as both sides agreed to pause some tariffs for 90 days, signaling a potential turning point in ongoing tensions.
This rollback cuts U.S. tariffs on Chinese goods to 30% and Chinese tariffs on U.S. imports to 10%, giving companies breathing room to reset inventories and supply chains.
However, President Trump clarified that tariffs could go "substantially higher" if a full deal with China wasn't reached during the 90-day pause, but not all the way back to the previous levels.
Still, the agreement has cooled fears of a prolonged trade war, helping stabilize expectations for global growth and trade flows and fueling renewed optimism. The optimism appeared concentrated in key trade-sensitive sectors, particularly technology, retail, and industrials, as lower tariffs reduce cost pressures and restore cross-border demand.
Universal Health Services is down 0.5% since the beginning of the year, and at $178.77 per share, it is trading 26% below its 52-week high of $241.52 from September 2024. Investors who bought $1,000 worth of Universal Health Services’s shares 5 years ago would now be looking at an investment worth $1,637.
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