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Investing.com - Guggenheim lowered its price target on Acadia Healthcare (NASDAQ:ACHC) to $29.00 from $36.00 on Thursday, while maintaining a Buy rating on the behavioral health services provider. The stock, currently trading at $18, has fallen over 74% in the past year and is hovering near its 52-week low of $17.12. According to InvestingPro analysis, the company appears undervalued at current levels.
The price target reduction follows Acadia’s underwhelming EBITDA performance, which Guggenheim attributes primarily to weak Medicaid volume growth. This trend is expected to continue through the second half of 2025, creating approximately a $30 million (or 4%) drag on yearly earnings. InvestingPro data shows current EBITDA at $644.67 million, with five analysts recently revising their earnings estimates downward.
Guggenheim noted that Acadia has pulled forward bed additions planned for 2025 along with associated ramp costs, coinciding with the challenging volume trends. The firm also highlighted potential reimbursement headwinds from the OBBBA DPP program, estimating an aggregate EBITDA impact of approximately $75 million between 2028 and 2032.
Despite these challenges, Guggenheim maintains its Buy rating, characterizing current difficulties as "transitory headwinds." The firm acknowledges that Acadia may need to reduce bed growth plans in response to the difficult reimbursement environment, which could help the company achieve breakeven free cash flow earlier than originally projected.
Guggenheim’s revised price target reflects a historically low multiple for a behavioral health business that should generate mid-single to high-single digit normalized EBITDA growth, along with more conservative projections for future performance.
In other recent news, Acadia Healthcare reported its second-quarter earnings for 2025, achieving an earnings per share (EPS) of $0.83, which exceeded analyst expectations of $0.70. This marks an 18.57% positive earnings surprise. Despite this achievement, the company’s stock experienced a decline in post-market trading. The earnings announcement highlights the company’s ability to surpass financial projections, though market reactions suggest investor apprehension about external challenges and uncertainties. There were no recent developments regarding mergers or acquisitions for Acadia Healthcare. Additionally, there have been no reported upgrades or downgrades from analysts on the company’s stock. The focus remains on the company’s financial performance and market perception amidst these developments.
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