12:13 PM EDT, 10/09/2024 (MT Newswires) -- PACS Group's ( PACS ) long duration dependent, or LDD, earnings potential makes it a "high quality" investment choice, UBS Securities said Wednesday in a report initiating coverage of the post-acute healthcare company with a buy rating.

"We believe that [PACS Group ( PACS )] will benefit from industry tailwinds including an aging population, growing chronic conditions among patients, and favorable reimbursement rates," UBS said, adding that it will also drive growth by acquiring and revitalizing underperforming facilities, improving occupancy rates, quality, and skilled staff mix.

UBS expects the company to achieve long-term revenue growth driven by increased demand for skilled nursing facility services, a favorable rate environment, improved care quality leading to higher occupancy rates, cost-effectiveness in post-acute care, and abundant acquisition opportunities in a fragmented industry, the report said.

UBS expects that PACS Group's ( PACS ) valuation is likely to grow as the healthcare sector shifts post-pandemic, projecting it will reach about 11 times enterprise value/earnings before interest, taxes, depreciation, amortization, and rent by 2026, up from the current 9.5, the report said.

UBS has a price target of $50 on PACS Group ( PACS ).

Shares of PACS Group ( PACS ) were up 2.1% in recent trading Wednesday.

Price: 39.21, Change: +0.88, Percent Change: +2.30