Chemed price target lowered to $640 from $674 at RBC Capital

Investing.com - RBC Capital has reduced its price target on Chemed (NYSE:CHE) to $640.00 from $674.00 while maintaining an Outperform rating on the stock. The healthcare and maintenance services company, with a market capitalization of $7 billion, maintains strong fundamentals with an 8.52% revenue growth and a beta of 0.55, indicating relatively low price volatility.

The price target adjustment reflects Medicare cap limitations weighing on Chemed’s 2025 outlook, with RBC Capital noting an expected approximately $22 million cap headwind at the company’s VITAS segment in the second half of 2025. According to InvestingPro analysis, Chemed maintains a "GREAT" financial health score, suggesting resilience against such headwinds.

RBC Capital expressed encouragement about VITAS’s new Certificate of Need (CON), which should help Chemed maintain strong positioning in an increasingly competitive Florida market while providing an additional lever to better manage cap pressure.

The firm also highlighted unexpected weakness in Chemed’s RotoRooter division, where a decline in residential volume more than offset improving commercial trends.

RBC Capital’s revised price target is based on adjusted 2025 estimates that account for both the VITAS Medicare cap headwind and the residential softness at RotoRooter.

In other recent news, Chemed Corporation reported its first-quarter 2025 financial results, exceeding analysts’ expectations with earnings per share of $5.63 against the forecasted $5.51. The company’s revenue reached $646.9 million, surpassing the anticipated $636.8 million. RBC Capital Markets responded to these robust earnings by raising Chemed’s stock price target to $674 from $667, maintaining an Outperform rating. Meanwhile, BofA Securities reaffirmed its Buy rating on Chemed, setting a price target of $708, citing confidence in the company’s handling of Medicare cap challenges and growth prospects.

At Chemed’s recent annual stockholders’ meeting, all nominated directors were elected, and the company’s 2025 Stock Incentive Plan was approved. Additionally, PricewaterhouseCoopers LLP was ratified as the independent accountant for the year. The meeting also saw the approval of Chemed’s executive compensation program on a non-binding basis. Analysts highlighted Chemed’s strategic management of its business segments, notably the VITAS Healthcare and Roto-Rooter divisions, which showed mixed performance but contributed positively to the company’s financial results.

These developments underscore Chemed’s proactive approach to navigating regulatory environments and optimizing business performance, with a focus on strategic growth and financial stability.

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