How are energy investors positioned?
On Thursday, Enhabit Home Health & Hospice (NYSE:EHAB) received a reaffirmation of confidence from Jefferies, as the firm maintained its Buy rating and a price target of $9.50. The endorsement comes after Enhabit’s recent disclosure of its fourth-quarter results and the outlook for fiscal year 2025.
The fourth-quarter performance of Enhabit showed a slight EBITDA beat, which analysts at Jefferies believe signals a stabilization in the company’s fundamentals. This stabilization is expected to contribute to a gradual expansion of the stock’s multiple. The financial guidance provided by Enhabit for fiscal year 2025 was also noted to align with consensus estimates, further supporting the positive outlook. According to InvestingPro data, analysts expect the company to return to profitability this year, with an EPS forecast of $0.22 for FY2025.
Jefferies underscored the attractiveness of Enhabit’s stock based on its relatively low valuation, currently at approximately 8 times EBITDA. The firm also highlighted the minimal political and regulatory risks associated with the company, which add to the stock’s appeal. InvestingPro data reveals a strong free cash flow yield and a price-to-book ratio of 0.82, suggesting potential value opportunity. Subscribers can access additional insights through the comprehensive Pro Research Report, which provides detailed analysis of Enhabit’s financial health and market position.
Enhabit’s potential for EBITDA growth was another key point of interest for Jefferies. The firm anticipates that Enhabit will continue to see improvements across key performance indicators (KPIs) such as volume, rate, and mix. These improvements are expected to drive EBITDA upside and, consequently, enhance the stock’s value.
The analyst’s comments emphasized the rationale behind maintaining the Buy rating, stating, "We maintain our Buy on EHAB and point to Q4 results being ’good enough’ and FY25 guidance bracketing consensus as indicators of stabilizing fundamentals that we believe will drive gradual multiple expansion. We remain positive on the stock given its relatively low valuation, low levels of political/regulatory risk, as well as potential EBITDA upside driven by continued improvements in volume, rate, and mix KPIs."
In other recent news, Enhabit Inc reported its fourth-quarter 2024 earnings, which fell short of analysts’ expectations for both revenue and earnings per share (EPS). The company posted an EPS of $0.04, missing the forecasted $0.06, and reported revenue of $258.2 million, slightly below the expected $262.12 million. Enhabit has been expanding its market presence with six new locations launched in 2024 and plans for 14 more, despite the earnings miss overshadowing these growth efforts. The company aims to save $2.5 million through cost-cutting measures, including branch closures. Enhabit projects net service revenue between $1.050 billion and $1.080 billion for 2025, with adjusted EBITDA expected to grow by up to 7%. Analysts from TD Cowen and Jefferies have shown interest in the company’s payer innovation contracts and growth strategies. CEO Barb Jacobsmeyer emphasized a focus on growth, and CFO Ryan Solomon highlighted expected sequential improvements in EBITDA. Enhabit continues to face operational challenges, including wage inflation and branch closures, which could impact future performance.
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