Universal Health Services (UHS) continues to face debate over behavioral health volumes, Morgan Stanley said in a note Wednesday.

Behavioral health volumes continue to be affected by health workforce issues and are expected to stay at the low end of the 2% to 3% range, but the company has seen some hiring improvements and remains optimistic about recovery, according to the note.

Citing improved supplemental payments and potential for higher share buybacks, Morgan Stanley increased its 2025 adjusted earnings before interest, taxes, depreciation and amortization estimate to $2.59 billion and earnings per share forecast to $21.80.

Valuation remains undemanding, though a sustained pickup in behavioral volumes is likely needed to drive a meaningful re-rating, the firm said.

Morgan Stanley raised its price target to $233 from $200, and reiterated an equal-weight rating on the stock.

Universal Health Services shares were up 2.1% in recent Wednesday trading.

Price: 223.97, Change: +4.65, Percent Change: +2.12