Despite Weak Q4 and 2023 Outlook, HCA Delivers Some Positive Underlying Trends; Shares Fairly Valued

Narrow-moat HCA turned in weak fourth-quarter results that included ongoing labor challenges and pressures from Hurricane Ian in its Florida stronghold. Also, the company gave slightly lower guidance for 2023 than we had been expecting, even when including a new share repurchase program. However, when also considering recently generated cash flows and our largely unchanged longer-term assumptions that are the key drivers of HCA's value, we do not anticipate adjusting our $239 fair value estimate even after making mild changes to our near-term estimates. HCA also noted some positive underlying trends that appear to have buoyed shares despite those weak headlines. Shares appear fairly valued to us.