HCA Healthcare upgraded to Buy despite recent struggles, with shares now fairly valued amid policy challenges.

HCA Healthcare's shares have underperformed recently, declining about 4% over the past year and dropping sharply in recent months. The company beat Q2 earnings expectations due to a one-time $400 million Medicaid payment, but underlying margins are pressured by a worsening payer mix. Guidance was lowered, with 2026 EPS forecasted at $29–$30 (around $28 excluding the Medicaid windfall) and free cash flow expected near $6 billion, reflecting ongoing policy challenges. At 13 times earnings and a 7.5% free cash flow yield, HCA is considered de-risked with a fair value estimate of $400, as current share prices already factor in these policy headwinds.