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On Friday, Barclays (LON:BARC) made a significant adjustment to Acadia Healthcare (NASDAQ:ACHC)’s stock outlook. The firm’s analyst, Andrew Mok, downgraded the company’s rating from Overweight to Equal Weight and revised the price target downward from $43.00 to $35.00. The downgrade comes as the stock has declined over 50% in the past six months, though InvestingPro data shows the company maintains a GOOD overall financial health score. The downgrade was prompted by a series of concerns about the company’s performance and future prospects.
Mok pointed out that Acadia Healthcare has revised down nearly all its long-term targets and reported an unexpected decrease in revenue per patient day. Despite these concerns, the company has maintained 9.13% revenue growth over the last twelve months, according to InvestingPro data. The company is also facing uncertainty regarding 5-10 facilities that have been affected by media coverage. Additionally, there are potential signs of slowing demand for Comprehensive Treatment Centers (CTCs), which further contribute to the analyst’s cautious stand on the company’s stock.
Barclays has also significantly reduced its EBITDA estimates for Acadia Healthcare for the years 2025 and 2026. The new estimates are lower by $60 million, an 8% decrease for 2025, and by $90 million, an 11% decrease for 2026. This reassessment has led to the new price target of $35, which is based on an 8.0x multiple of the firm’s 2026 EBITDA estimate, adjusted for stock-based compensation and non-controlling interest (NCI). Notably, InvestingPro’s Fair Value analysis suggests the stock is currently undervalued, with broader analyst targets ranging from $43 to $78.
Despite the downgrade, the new price target still represents a premium valuation compared to Universal Health Services (NYSE:UHS), which is considered a peer in the industry. Acadia currently trades at a P/E ratio of 13.3x and maintains a solid gross profit margin of 43.1%. UHS is currently experiencing accelerated growth, with projections of 5-11% in 2025, excluding Tennessee and Washington D.C. payments. This contrast highlights the challenges Acadia Healthcare faces as it seeks to maintain its competitive position in the market.
In other recent news, Acadia Healthcare reported fourth-quarter earnings that missed analyst expectations, with adjusted earnings per share at $0.64 compared to the consensus estimate of $0.72. The company also reported revenue of $774.2 million, which, while up 4.2% year-over-year, fell short of the projected $780.22 million. Acadia’s forecast for 2025 has also disappointed, with expected earnings per share between $2.50 and $2.80, below Wall Street’s expectation of $3.36. The company anticipates 2025 revenue to be between $3.3 billion and $3.4 billion, not reaching the $3.43 billion consensus. For the first quarter of 2025, Acadia expects revenue between $765 million and $775 million, significantly below the $822 million anticipated by analysts. Despite these financial shortfalls, Acadia achieved record annual revenue of $3.2 billion, with a 4.7% increase in same-facility revenue for the quarter. The company also expanded its capacity by adding 577 newly licensed beds, including 344 from newly constructed facilities. Additionally, Acadia’s board has authorized a new $300 million share repurchase program.
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