Tenet Turns in Strong Q4 but Guides Below Our 2022 Expectations; Maintaining Fair Value

Tenet turned in a stellar fourth quarter that pushed 2021 results above our profit and cash flow expectations. However, with some near-term concerns expected to pressure 2022, management gave guidance that was slightly lower than our previous expectations. We are maintaining our $66 fair value estimate after adjusting our assumptions for those near-term concerns, which were offset by its strong recent results in our model. Additionally, with ROICs well over WACC after recent capital allocation activities like pruning underperforming assets, acquiring high-margin ambulatory surgery centers, and reducing debt leverage, we continue to see room for upside to our current no-moat rating on Tenet.