Tenet Plans to Buy More Ambulatory Surgery Centers; Raising Fair Value

On Nov. 8, Tenet announced plans to expand its ambulatory surgery center footprint by further combining forces with SurgCenter Development, after another ASC deal about a year ago. We have moderately increased our fair value estimate for Tenet and generally view the transaction as positive, representing another example of the company's shrewd capital allocation since new management took over in 2017. If the firm continues to make positive moves like this and looks likely to generate economic profits, we would consider raising Tenet's current no-moat rating, which would push our fair value estimate even closer to recent share prices with no other changes to our assumptions.