KeyBanc has increased its 12-month price target on Tenet Healthcare (THC) to $250 from $225 and maintained an Overweight recommendation after the healthcare services provider released fourth-quarter results. The bank described the quarter as "good" and characterized Tenet's 2026 guidance as "better," prompting an upward revision to its financial model.
The move followed a strong market reaction to Tenet's announcement, with the stock rising about 17% and materially outpacing the S&P 500, which remained essentially flat. KeyBanc connected the rally to two primary considerations it sees driving value into 2026.
First, the firm pointed to Tenet's potential to produce outsized efficiency gains next year that could more than offset pressures from the Healthcare Insurance Exchange - HIX - business. Second, KeyBanc noted signals from major healthcare services companies that utilization levels remain elevated overall, even if some metrics show slight moderation. Both factors, the analyst argued, support a more constructive outlook for margins and cash generation.
In discussing longer-term drivers, KeyBanc emphasized growth opportunities tied to USPI/ASC expansion and the company's capacity for capital deployment. Those elements were cited as part of the rationale behind the updated valuation and the higher price target.
Tenet's reported fourth-quarter financials for 2025 underscored the immediate backdrop for the analyst action. The company posted earnings per share of $4.70, well above the consensus estimate of $4.02 - a difference KeyBanc and the report quantified as a 16.92% surprise. Revenue for the quarter came in at $5.53 billion versus expectations of $5.47 billion, also surpassing forecasts.
Despite the beat on both earnings and revenues, Tenet's shares experienced a pre-market decline before ultimately trading higher on the day of the analyst update. The discrepancy between the initial market response and the later rally was the subject of KeyBanc's note, which attributed the stronger post-release performance to updated expectations around efficiency gains and sustained utilization trends.
KeyBanc's revised target reflects the firm's recalibrated financial model after reviewing Tenet's fourth-quarter results and the company's 2026 guidance. The analyst continues to assign an Overweight rating to the stock, and the recommendation is consistent with fair-value calculations that indicate the shares are slightly undervalued, supported by an analysts' consensus recommendation of 1.5 (Strong Buy).
What to watch next - Investors will be monitoring Tenet's ability to convert guidance into realized efficiency improvements in 2026, the trajectory of HIX-related headwinds, and how utilization trends evolve across major healthcare services providers.