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On Wednesday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Acadia Healthcare (NASDAQ:ACHC), reducing the price target to $32 from the previous $37 while maintaining a Neutral stock rating. The decision follows Acadia Healthcare’s first-quarter financial performance of 2025, where the company reported adjusted EBITDA of $632.15 million that outperformed consensus estimates by 1.3%. Despite this, the company has been experiencing challenges due to diminished patient volumes at some of its facilities, attributed to adverse local media reports and an ongoing federal investigation into the company’s billing practices. According to InvestingPro analysis, the stock appears undervalued at its current price of $26.94, despite showing a significant 11.51% return over the past week.
The revised price target reflects the earnings growth anticipated in the company’s guidance, with analysts forecasting EPS of $2.66 for FY2025. Acadia Healthcare reaffirmed its guidance for the year 2025, indicating that the current patient volumes, though impacted, align with the company’s projections for the year. The firm’s analysts believe that the demand for behavioral health services, which Acadia Healthcare provides, remains robust. They anticipate that the company will gradually recover to normal patient volumes and cash flows, benefiting from the addition of new beds in 2024. InvestingPro data reveals the company maintains a healthy gross profit margin of 41.92% and an overall Financial Health score rated as "GOOD," suggesting operational resilience despite current challenges.
While the company is on a path to recovery, Mizuho underscores that it may be a prolonged process spanning multiple years. The firm’s analysts have chosen to maintain their estimates for the years 2025 through 2027, taking into account the company’s recent performance and future prospects. The reaffirmation of the Neutral rating suggests a cautious but not pessimistic outlook on Acadia Healthcare’s stock, as the company works through its current challenges and capitalizes on the underlying demand for its services. With a P/E ratio of 12.67 and a Price/Book ratio of 0.82, detailed analysis of these valuation metrics and more is available in the comprehensive Pro Research Report on InvestingPro.
In other recent news, Acadia Healthcare reported its first-quarter 2025 earnings, which slightly exceeded analysts’ expectations with an earnings per share (EPS) of $0.40, compared to the forecasted $0.39. However, the company’s revenue fell short of projections, coming in at $770.5 million against the expected $777.25 million. Despite the revenue miss, Acadia reaffirmed its full-year 2025 revenue and EBITDA guidance, showing confidence in its operational strategies. Additionally, the company expanded its capacity by adding 378 new beds in the first quarter, aligning with its growth initiatives.
In analyst updates, KeyBanc Capital Markets adjusted its outlook on Acadia Healthcare, lowering the price target from $65.00 to $55.00 while maintaining an Overweight rating. This adjustment was made after Acadia’s first-quarter earnings report, which showed a positive step towards stronger performance despite previous challenges. KeyBanc’s analysis suggests potential growth for Acadia’s EBITDA and free cash flow in 2026, with a revised price target reflecting a 9.5x multiple on EBITDA.
Acadia Healthcare continues to focus on expanding its behavioral health services, with plans to add 600-800 beds annually from 2026 to 2028. The company anticipates potential supplemental Medicaid payments in the latter half of 2025, which could support financial stability. These developments, coupled with strategic operational updates, demonstrate Acadia’s commitment to growth and meeting the increasing demand for high-quality behavioral health care.
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