These are top 10 stocks traded on the Robinhood UK platform in July
Tuesday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Acadia Healthcare (NASDAQ:ACHC), reducing the stock’s price target from $48.00 to $37.00, while maintaining a Neutral stance on the company’s shares. The revision comes as the stock trades near its 52-week low of $27.61, having declined over 61% in the past six months. The revision follows Acadia Healthcare’s recent update to its long-term financial targets, which now anticipates average annual revenue growth of 7-9% and average adjusted EBITDA annual growth of 8-10%.According to InvestingPro analysis, Acadia Healthcare appears undervalued based on its Fair Value model, with 12 additional real-time insights available to subscribers.
The updated financial targets represent a downward revision, with a 200 basis points decrease in revenue growth and a 300 basis points drop in adjusted EBITDA growth expectations. The company’s current revenue growth stands at 7.69%, with an EV/EBITDA multiple of 7.18x. In response to these changes, Mizuho has also adjusted its adjusted EBITDA estimates for the years 2025 through 2027.
The new price target set by Mizuho is based on a multiple of 7.5 times the firm’s 2025 adjusted EBITDA estimate for Acadia Healthcare. This valuation is notably lower than the company’s ten-year average multiple of 11.5 times and the low-average of 9.2 times. The rationale behind this conservative multiple lies in the anticipation that Acadia Healthcare will not trade at its previous multiples until it demonstrates the ability to generate positive free cash flow.
Mizuho’s analyst believes that the lowered guidance is a positive development, as the previous outlook was considered to be based on overly aggressive growth plans. The new, more conservative targets are seen as prudent and are expected to mitigate risk for the company moving forward.
In other recent news, Acadia Healthcare Company Inc. reported its fourth-quarter 2024 financial results, revealing a miss on both earnings per share (EPS) and revenue projections. The company posted an EPS of $0.64, falling short of the expected $0.72, and revenue of $774.2 million, which also missed the forecasted $780.22 million. Despite a 4.2% year-over-year revenue growth, Acadia’s adjusted EBITDA margin decreased to 19.8% from 22.8% the previous year. In response to these results, KeyBanc Capital Markets revised its outlook on Acadia Healthcare, lowering the price target from $70.00 to $65.00, though it maintained an Overweight rating on the stock. Acadia also announced an upsized private offering of senior notes, increasing the total to $550 million from the initial $500 million. The proceeds are intended to repay borrowings under the company’s senior secured revolving credit facility. Additionally, Acadia continues its expansion efforts, planning to add 800 to 1,000 new beds in 2025, despite facing operational challenges with some underperforming facilities.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.