Universal Health Services: Valuations Look Attractive After A Meaningful Correction

I am initiating coverage on Universal Health Services with a Buy rating and a 24-month investment horizon, citing attractive valuations. UHS’s behavioral health segment offers robust EBITDA margins and geographic diversification, with growth potential from the Talkspace acquisition and UK expansion. Despite concerns from the OBBBA and recent earnings misses, UHS’s strong credit profile, healthy cash flows, and low leverage support continued capital allocation flexibility. UHS trades at a forward EV/EBITDA of 5.72 versus a sector median of 12.78, indicating a meaningful valuation gap and capped downside.