Key Stats for Encompass Health Stock
- Price change for Encompass Health stock: 8%
- $EHC Stock Price as of Apr. 6: $105
- 52-Week High: $128
- $EHC Stock Price Target: $143
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What Happened?
Encompass Health (EHC) stock jumped 8% after the Centers for Medicare and Medicaid Services (CMS) proposed a 2.4% Medicare payment increase for inpatient rehabilitation facilities in fiscal year 2027.
- The proposal came in roughly in line with expectations, and KeyBanc noted the final rule will likely be even better.
- Critically, the proposed rule does not include any other changes that would materially hurt Encompass Health in 2027.
- CMS issued a request for information on future payment reforms, but KeyBanc described them as modest and far off on the horizon.
KeyBanc reiterated its Overweight rating and $145 price target following the news.
Analyst Matthew Gillmor made the key point clearly:
- Uncertainty around this proposal had been an overhang on Encompass Health stock for some time.
- With that uncertainty now largely removed, he believes the stock could be set up for outperformance in the second half of the year.
The stock currently trades near its 52-week low of $92.77, and analysts suggest it looks undervalued at current levels with a PEG ratio of just 0.71.
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What the Market Is Telling Us About Encompass Health Stock
Encompass Health stock had been under pressure despite strong underlying business performance.
- The company just reported Q4 earnings of $1.46 per share, well ahead of the $1.30 estimate.
- Revenue came in at $1.54 billion, in line with projections, and
- adjusted EBITDA of $336 million beat the consensus estimate of $313 million by a wide margin.
The business is clearly healthy.
- Full year 2025 revenue grew 10.5%, free cash flow hit $818 million, and premium labor costs fell by more than $21 million year-over-year.
- The company opened eight new hospitals in 2025 and ended the year with a net leverage ratio of just 1.9x.
Management is also planning to accelerate growth.
Encompass Health is targeting a smaller 24-bed hospital model launching in 2027.
That hub-and-spoke approach will allow the company to expand into larger markets more efficiently.
Raymond James, Truist Securities, and KeyBanc all maintained bullish ratings on Encompass Health stock in recent weeks, reflecting broad analyst confidence in the company’s trajectory.
With regulatory uncertainty fading and the business compounding steadily, Encompass Health stock may have looked cheap heading into today’s news.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
