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On Wednesday, Cantor Fitzgerald reiterated a Neutral rating on Acadia Healthcare (NASDAQ:ACHC), maintaining a $40.00 price target. The firm’s analyst cited several factors for the decision, including the current valuation of the company’s stock and uncertainties surrounding volume recovery. Currently trading at a P/E ratio of 12.7x and EV/EBITDA of 7.7x, InvestingPro analysis suggests the stock is undervalued. The $40 price target is based on a 7.6x enterprise value to adjusted EBITDA multiple on the projected 2026 adjusted EBITDA of $763 million. This target represents a 34% discount to Acadia Healthcare’s historical five-year average, a 1% discount to its peer Universal Health Services (NYSE:UHS), and an 18% discount to the broader provider group high.
The analyst highlighted the company’s growth strategies, which include facility expansion, new facility openings (de novo expansion), joint venture expansion, mergers and acquisitions (M&A), and enhancing the continuum of care. Despite these potential growth avenues, the analyst pointed out several risks that could affect the price target. These risks include an increase in labor costs, the challenge of achieving a positive spread between pricing and cost inflation, the ability to sustain high growth through expansions, joint ventures, and M&A, and the company’s capacity to increase market share in the highly competitive comprehensive treatment center (CTC) market.
Acadia Healthcare’s exposure to inpatient psychiatric services was noted as a factor contributing to the discount in valuation compared to the broader group. The analyst’s commentary reflects a cautious outlook on the company’s stock, suggesting that while there are opportunities for growth, there are also significant challenges that the company must navigate.
The reiterated Neutral rating and price target indicate that Cantor Fitzgerald does not see significant upside or downside to the current stock price at this time, suggesting that the stock is fairly valued based on their analysis. The analyst’s remarks provide current and potential investors with an overview of Acadia Healthcare’s financial outlook and the factors that could influence its stock performance in the near future.
In other recent news, Acadia Healthcare reported its first-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $0.40, slightly above the forecast of $0.39. However, the company’s revenue came in below projections at $770.5 million compared to the expected $777.25 million. Despite this revenue miss, Acadia Healthcare reaffirmed its full-year 2025 revenue and EBITDA guidance, indicating confidence in its operational strategies. The company added 378 new beds in the first quarter, continuing its expansion in the behavioral health sector. Analyst firms have adjusted their outlooks on Acadia Healthcare, with Mizuho (NYSE:MFG) Securities cutting the price target to $32 while maintaining a Neutral rating, and KeyBanc Capital Markets reducing the price target to $55 but keeping an Overweight rating. Mizuho highlighted challenges such as diminished patient volumes due to adverse media reports and an ongoing federal investigation, while KeyBanc noted Acadia’s stable financial ground and potential growth in EBITDA and free cash flow by 2026. Both firms acknowledge the robust demand for behavioral health services that Acadia provides, with expectations of recovery and growth in the coming years.
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