Why This Small-Cap Healthcare Stock Could Surge 60% In Two Years

Key Takeaways:

• The 2-Minute Valuation Model values Ardent Health stock at $24 per share in 2 years.
• That’s a potential 60% upside from today’s price of $15 per share.
• ARDT stock is projected to grow EPS by 56% over the next three years, as volume growth and operational improvements drive margin expansion.
• The hospital operator stock is trading at historically low valuations despite strong execution in high-growth markets.
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Ardent Health Partners (ARDT) is one of the largest for-profit hospital operators in the United States, serving patients across eight high-growth, mid-sized urban markets through more than 30 acute care hospitals and extensive outpatient networks.

With its unique joint venture model, which partners with academic institutions, a focus on fast-growing Sunbelt markets, and a comprehensive approach that combines inpatient and outpatient services, Ardent has positioned itself to capture market share growth while driving operational excellence across its platform.

With the healthcare stock now trading at $15 per share, Ardent Health presents a compelling opportunity for investors seeking exposure to the healthcare recovery story, enhanced by a proven ability to execute on volume growth, margin expansion, and strategic acquisitions in attractive markets.

Let’s examine why this hospital operator can deliver substantial returns, benefiting from durable volume trends, operational improvements, and strategic growth initiatives across its high-quality market footprint.

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What is the 2-Minute Valuation Model?

Three core factors drive a stock’s long-term value:

1. Revenue Growth: How big the business becomes.
2. Margins: How much the business earns in profit.
3. Multiple: How much investors are willing to pay for a business’s earnings.

Our 2-Minute Valuation Model uses a simple formula to value stocks:

Expected Normalized EPS * Forward P/E ratio = Expected Share Price

Revenue growth and margins drive a company’s long-term normalized earnings-per-share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.

Why the Healthcare Stock Looks Undervalued

Forecast

Based on analyst estimates, Ardent Health is expected to achieve strong earnings growth over the next three years as volume recovery continues and operational improvements drive margin expansion.

EPS is projected to grow from $1.55 in 2024 to $2.42 by 2027, representing a 56% increase over the three years.

The growth trajectory shows strong acceleration driven by volume normalization and operational excellence.

In 2025, the company is expected to deliver 28% EPS growth, followed by 7% growth in 2026 and 14% growth in 2027.

This earnings growth for ARDT stock is likely to be driven by:

• Strong volume trends: 7.6% admission growth in Q1 (adjusted admission growth was 2.7%), with durable demand in high-growth markets growing 3x faster than the U.S. average.
• Operational excellence: 100-200 basis points of margin expansion opportunity through supply chain, labor optimization, and scale efficiencies.
• Outpatient expansion: Strategic focus on higher-margin ambulatory services, including ASCs and urgent care facilities.
• Market share gains: Transfer center optimization and service line rationalization are driving increased volumes.
• Geographic advantages: Positioned in 8 mid-sized urban markets with favorable demographics and growth characteristics.
• Joint venture model: Unique academic partnerships providing competitive advantages and growth opportunities.

For our valuation, we’ll estimate that the healthcare stock will reach $2.40 in EPS in 2027.

Check out Ardent Health’s full analyst estimates (It’s free) >>>

Is Ardent Stock Undervalued Right Now?

Ardent Health stock trades at around 7x forward earnings, which is below its historical average P/E of 9x, as shown in the valuation chart.

This compressed valuation creates an attractive entry point for a high-quality hospital operator with strong market positions and proven execution capabilities in attractive growth markets.

For our valuation, we’ll use a forward P/E multiple of 10x, which reflects a reasonable multiple for a growing healthcare services company while recognizing the quality of Ardent’s market positions and operational improvements.

Fair Value of ARDT Stock

Using our 2-Minute Valuation Model and applying a conservative approach:

• Conservative 2027 EPS estimate: $2.40
• Conservative forward P/E multiple: 10x
• Expected dividends over the next 2 years: $24

Expected Normalized EPS ($2.40) * Forward P/E ratio (10x) = Expected Share Price ($24)

The 2-year expected ARDT stock price we would get from this valuation is $24 per share.

With the healthcare stock currently trading at around $15 per share, this implies a potential upside of 60% over the next two years or a 27% annualized return.

ARDT stock is well-positioned to deliver outsized gains to shareholders, given that the broader markets’ average annual returns have been around 10%.

Remember, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.

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What is Ardent Stock’s Average Analyst Target Price?

Analysts think that Ardent stock could have strong upside today.

Analysts have an average price target of around $20 per share for ARDT stock, indicating they see about 37% upside today for Ardent based on its current share price:

Risks to Consider

Despite the bullish outlook, investors should be aware of several risks that could impact Ardent’s growth trajectory:

• Regulatory uncertainty: Healthcare policy changes, including potential impacts to directed payment programs (DPPs).
• Labor cost inflation: Continued pressure from physician professional fees and nursing costs.
• Payer pressure: Increased claim denials and extended payment cycles from managed care plans.
• Economic sensitivity: Hospital volumes can be influenced by economic downturns and shifts in consumer spending patterns.

TIKR Takeaway

Ardent Health presents a compelling value opportunity at current levels. The healthcare stock’s upside potential is driven by its strong positions in high-growth markets, proven operational excellence delivering margin expansion, a unique joint venture model providing competitive advantages, and successful execution of an outpatient expansion strategy.

While ARDT faces typical hospital industry headwinds from labor costs and payer pressure, its focus on fast-growing midsized urban markets, disciplined capital allocation with $500 million in cash, and track record of operational improvements make it uniquely positioned to benefit from healthcare volume recovery and market share gains in its attractive geographic footprint.

Is Ardent stock a buy over the next 24 months? Use TIKR to check the stock’s analyst price targets and growth forecasts to see if it is undervalued today.

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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!