Stephens, a financial services firm, maintained its Overweight rating and $24.00 price target for Ardent Health Partners Inc (NYSE:ARDT), following the company's recent financial maneuvering. Ardent Health has successfully amended its term loan credit agreement, which has resulted in a reduction of the interest rate spread by approximately 50 basis points.
The new rate is set at SOFR + 275 basis points, a decrease from the previous SOFR + 325 basis points.
The amendment also includes the elimination of the credit spread adjustment, which is expected to yield approximately $5 million in annual savings for Ardent Health.
These savings enhance the company's free cash flow profile and could provide additional capital for investments in high-growth areas, such as the expansion of its outpatient and Ambulatory Surgery Center (ASC) footprint. This strategy is integral to Ardent Health's long-term growth.
The financial services firm has updated its model to reflect the lower interest rates, which are anticipated to take effect primarily in the fourth quarter of 2024. As a result of the revised interest rate spread on the term loans, the firm's adjusted earnings per share (EPS) forecast for Ardent Health increases by $0.05 in 2025, from $2.00 to $2.05, and by $0.07 in 2026, from $2.23 to $2.30, assuming other debt conditions remain unchanged.
The Overweight rating indicates that Stephens views Ardent Health Partners' stock as a better value than the average stock in the analyst's coverage universe. The $24.00 price target is maintained, suggesting that the firm believes the stock has the potential to reach this price level in the foreseeable future.
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