BrightSpring Health Services went public 16 months ago and has grown into the No. 1 stock in its industry group. The provider of health care for aging and other special-needs patients is today's IBD Stock Of The Day.
Louisville, Ky.-based BrightSpring provides at-home care and pharmacy services for patients needing specialized or chronic care, mostly the elderly. With America's population growing older, the company and analysts see the potential for sustained growth.
Analysts' consensus earnings estimate for this year is 84 cents a share, an increase of 50%. Of a dozen analysts who cover the company, 11 have buy ratings and the other has a hold rating, according to FactSet.
Already, BrightSpring Health has an impressive growth record, with earnings per share growth of 23% to 96% over the past four quarters. Revenue climbed 13% to 29% over those periods, per FactSet.
BrightSpring is using acquisitions to grow. In September, it closed the purchase of North Central Florida Hospice and Haven Medical Group, both which serve Florida.
Health Care Stock Leads Industry
At an investor conference this month, executives said specialty infusion revenue grew about 30% in Q1, where innovation in cancer treatments is boosting growth. As more generic-drug alternatives become available, it also drives growth in the company's pharmacy business.
BrightSpring has a perfect IBD Composite Rating of 99, the highest of 18 stocks in the outpatient and home care industry group.
The health care stock jumped nearly 17% on May 2, when first-quarter sales and earnings sailed past even the most optimistic analyst estimate, according to FactSet.
The company also raised its outlook. For the full year, it forecast revenue of $12 million to $12.5 million and adjusted EBITDA of $570 million-$585 million. Last year, total revenue was $11.266 million and EBITDA was $588 million.
Regarding tariff risk, CEO Jon Rousseau told analysts in a conference call he doesn't expect any material impact this year, given the company's inventory and contracts. About 50% of its drugs come from U.S. and North American suppliers.
The company also saw no major risk from government initiatives to lower drug costs and reimbursement policies, according to a transcript via FactSet.
BrightSpring Stock Near Buy Point
The stock is forming a cup base with an 24.82 buy point. BTSG has pulled back this week on light volume. It's set to have a handle entry at 24.80 after Friday. Just ahead of the dip, its IBD MarketSurge daily chart marked multiple "ants" signaling heavy institutional buying.
Institutional demand for the health care stock is also evident in the longer term, with its Accumulation/Distribution Rating at A. The relative strength line is near highs, which is another positive chart signal.
BrightSpring stock has a 21-day average true range (ATR) of 5.37%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
