Enhabit stock target raised to $12 at Jefferies, retains Buy rating

On Thursday, Jefferies increased its price target for Enhabit Home Health & Hospice (NYSE:EHAB) shares to $12.00, up from $11.75, while maintaining a Buy rating on the stock. The adjustment follows Enhabit’s first-quarter earnings, which, according to Jefferies analysts, indicate operational improvements after the company’s recent strategic initiatives.

The firm’s analysts have reiterated their positive stance on the stock, noting that Enhabit’s operations have shown signs of improvement. With annual revenue of $1.03 billion and a gross profit margin of 49%, the company demonstrates solid operational fundamentals. They believe that a robust pipeline of payor innovation will lead to better rates. Additionally, the analysts are of the opinion that there is potential for the management to further reduce general and administrative costs, which could contribute to margin expansion.

Jefferies acknowledges that investors are currently looking for clarity regarding Medicare home health rates, which are expected to be released at the end of June. The firm’s analysts have expressed their outlook that these rates will have a significant impact on the company’s financials. InvestingPro subscribers can access 12 additional key insights about EHAB, including detailed financial health scores and comprehensive valuation metrics in the Pro Research Report.

The company’s strategic actions taken recently appear to have positively influenced its operational performance, as observed in the first-quarter earnings. The analysts’ maintained Buy rating reflects their confidence in Enhabit’s growth trajectory and the potential for increased profitability through improved rates and cost management.

Enhabit Home Health & Hospice is expected to navigate the near-term with a focus on operational efficiency and financial discipline, as it awaits further details on Medicare home health rates, which are anticipated to be a critical factor in shaping the company’s future earnings and stock performance.

In other recent news, Enhabit Inc. reported its financial results for the first quarter of 2025, surpassing analysts’ expectations with an earnings per share (EPS) of $0.10, compared to the forecast of $0.06. However, the company’s revenue of $259.9 million fell short of the anticipated $266.56 million. Despite this revenue shortfall, Enhabit saw positive investor reaction, as evidenced by a nearly 11% surge in its stock price following the earnings announcement. The company highlighted strategic initiatives in its home health and hospice segments, which contributed to an 8.1% increase in home health admissions and a 12.3% growth in hospice census. Enhabit reaffirmed its 2025 guidance, indicating continued focus on operational optimization and growth in key segments. Additionally, Enhabit made operational improvements such as transitioning to outsourced coding, which is expected to deliver significant cost savings. The company’s free cash flow was reported at $17 million, alongside a $25 million reduction in bank debt, reflecting a commitment to strengthening its financial position. Enhabit remains focused on managing its cost structure and enhancing clinical staff productivity as part of its broader strategic priorities for 2025.

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