EHC Should I Buy
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Encompass Health Corp (EHC) is not a strong buy at the moment due to mixed signals. While the company's financial performance is solid with strong YoY growth in revenue, net income, and EPS, the ongoing legal investigations and safety concerns present significant risks. Additionally, technical indicators and options data do not show strong bullish sentiment, making it better suited for a hold rather than a buy for a beginner investor with a long-term strategy.
The MACD is above 0 and positively contracting, indicating a mild bullish trend. RSI is neutral at 56.574, and moving averages are converging, suggesting no strong directional signal. Key support is at 98.244, and resistance is at 108.752. Overall, the technical indicators are neutral.
The company reported strong financial growth in Q4 2025, with revenue up 9.94% YoY, net income up 21.32% YoY, and EPS up 21.19% YoY. Gross margin also improved slightly.
Ongoing investigations into potential securities fraud and unlawful business practices, along with safety concerns at Encompass-operated hospitals, could lead to reputational damage and financial liabilities. These issues have already caused a significant stock price drop in the past.
In Q4 2025, Encompass Health reported revenue of $1.5446 billion (+9.94% YoY), net income of $145.7 million (+21.32% YoY), and EPS of $1.43 (+21.19% YoY). Gross margin improved slightly to 90.23%.
Barclays recently raised the price target for EHC to $153 from $150 and maintained an Overweight rating, reflecting optimism about the company's future performance despite recent challenges.
