Courtesy of Benzinga.
Shares of Acadia Healthcare Company Inc (NASDAQ: ACHC) plummeted 25 percent after the behavioral healthcare services company with operations in the U.S. and U.K. reported disappointing third-quarter earnings.
In reaction to the earnings report, Baird’s Whit Mayo downgraded Acadia’s stock from Outperform to Neutral with a price target lowered from $55 to $38.
- Acadia Healthcare acknowledged its U.K. performance in September was unusually soft amid higher agency costs and a tightening labor market, the analyst wrote in a note. Moreover, the country’s entire healthcare system is seeing “accelerated challenges” that are likely “magnified” from the 2016 Brexit vote.
- The stock’s forward multiple has been stuck in a range of approximately 10x to 12x EV/EBITDA and there’s no reason to justify a multiple of 10x or better.
- A string of stock sales from insider will prove to be a “sticking point” for investors.
- A recurring factor, Acadia Healthcare is overly ambitious estimates from Wall Street. This was the case in the third quarter earnings report where the company’s revenue of $717 million was 1.3 percent short of expectations and EBITDa of $152 million was 6.5 percent. Meanwhile, initial estimates for 2018 will likely prove to be “too ambitious” and on the high side.
- The company’s growth strategy has been based on acquiring and integrating new behavioral health facilities and moving forward new M&A deals will likely prove to be “less rewarding.”
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Latest Ratings for ACHC
Date | Firm | Action | From | To |
---|---|---|---|---|
Oct 2017 | Baird | Downgrades | Outperform | Neutral |
Oct 2017 | BMO Capital | Initiates Coverage On | Outperform | |
Jul 2017 | UBS | Maintains | Buy |
View More Analyst Ratings for ACHC
View the Latest Analyst Ratings
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