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On Wednesday, BofA Securities affirmed their positive stance on Chemed Corporation (NYSE:CHE), maintaining a Buy rating and a price target of $708.00. The decision follows a fireside chat with Chemed’s leadership team at the BofA Health Care Conference. During the event, President & CEO Kevin McNamara, Vitas CEO Nick Westfall, and CFO Mike Witzeman discussed strategies for managing the Medicare cap situation.
The BofA Securities team highlighted Chemed’s proactive steps toward handling potential challenges associated with Medicare caps. Leadership expressed confidence in their ability to navigate these issues without affecting the company’s core growth prospects. This assurance underpins BofA’s continued endorsement of Chemed’s stock. According to InvestingPro, the company operates with a moderate level of debt, maintaining a healthy debt-to-equity ratio of 0.12, which provides financial flexibility during challenging periods.
Chemed’s hospice care subsidiary, Vitas, is experiencing attractive growth, with high single-digit census increases noted by the BofA analysts. This growth, coupled with the stabilization of Chemed’s Roto-Rooter business, contributes to the firm’s optimistic outlook for the company. InvestingPro data reveals that three analysts have recently revised their earnings upwards for the upcoming period, and the company has maintained dividend payments for an impressive 55 consecutive years.
The reaffirmed Buy rating by BofA Securities indicates their belief in Chemed’s potential for continued financial performance. The $708.00 price target suggests a positive forecast for the stock’s future value, reflecting the confidence in Chemed’s strategic management and growth trajectory.
Investors and market watchers will likely monitor Chemed’s progress closely, especially in relation to its handling of the Medicare cap situation, which is a pivotal factor in the company’s ongoing success.
In other recent news, Chemed Corporation reported its first-quarter 2025 financial results, which surpassed analysts’ expectations. The company achieved an earnings per share (EPS) of $5.63, exceeding the forecasted $5.51, and reported revenue of $646.9 million, surpassing the anticipated $636.8 million. The VITAS Healthcare segment contributed significantly to these results, with a 15.1% increase in net revenue year-over-year. Meanwhile, the Roto-Rooter division experienced a modest 3.1% growth in gross branch revenue but faced challenges with a 2.4% decline in adjusted EBITDA. RBC Capital Markets responded to these results by raising Chemed’s price target from $667 to $674, maintaining an Outperform rating due to the company’s strong performance and positive outlook for its Roto-Rooter business. The analyst noted that concerns over potential Medicare cap limitations appear exaggerated, as Chemed is proactively managing these issues. The company plans to provide updated earnings guidance in June 2025, with expectations for sustainable growth driven by strategic expansions and pricing adjustments.
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