Jefferies raised its price target on Tenet Healthcare (NYSE:THC) to $265.00 from $250.00 on Thursday while retaining a Buy rating on the hospital operator's shares. The new target implies upside from Tenet's most recent price of $226.35, with the stock trading close to its 52-week high of $229.
The firm highlighted an approximate 5% EBITDA growth trajectory and strong free cash flow generation as the primary drivers behind its more bullish outlook. InvestingPro data referenced by Jefferies shows Tenet's EBITDA at $4.3 billion and a free cash flow yield of 13%.
Jefferies argued that Tenet's valuation - at under 8x EBITDA - does not fully capture the company's growth prospects or its materially improved balance sheet. InvestingPro-derived metrics place Tenet's EV/EBITDA at 7.45x, and Jefferies' commentary indicates that the stock may be trading below its calculated Fair Value.
The analyst note also pointed to potential upside to EBITDA from pending Medicaid rate increases administered through supplemental payment programs (SDPs). In addition, Jefferies cited the company's capital allocation flexibility - including the possibility of further mergers and acquisitions or share repurchases - as a factor that could support additional appreciation in the equity.
Recent operating and market developments
Tenet reported stronger-than-expected fourth-quarter results for 2025. The company posted earnings per share of $4.70, ahead of the $4.02 consensus estimate, representing a 16.92% earnings surprise. Revenue for the quarter came in at $5.53 billion, modestly above the $5.47 billion forecast.
Following the quarterly release, KeyBanc raised its price target on Tenet from $225 to $250 and kept an Overweight rating. KeyBanc described the fourth-quarter print as "good" and characterized Tenet's 2026 guidance as "better." Despite those positive metrics and the target revisions, the stock showed a slight pre-market decline after the results were announced.
Market context and valuation notes
Jefferies' decision to lift its target rests on a combination of near-term operating momentum, a healthy free cash flow profile, and a valuation that, in the firm's view, understates future earnings potential. The firm specifically identified supplemental Medicaid payments as a possible source of incremental EBITDA and emphasized capital deployment options as channels for shareholder value creation.
Investors and market participants watching Tenet will likely weigh the company's reported quarter, guidance for 2026, potential Medicaid rate actions, and any moves on M&A or buybacks when assessing the stock relative to the raised target.