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On Thursday, Raymond (NSE:RYMD) James reaffirmed a strong buy rating and a $40.00 price target for Acadia Healthcare stock (NASDAQ:ACHC). According to InvestingPro analysis, the stock appears significantly undervalued, trading at just 7.5x EV/EBITDA and a P/E ratio of 13.2. The company’s first-quarter results for 2025 met analyst expectations, with reported revenue of $770.5 million, closely aligned with the anticipated $769.9 million. Adjusted EBITDA was $134.2 million, slightly above the expected $132.1 million. Acadia Healthcare saw a 2.2% growth in same-store patient days, even with a 110 basis point calendar day headwind, which was a positive indicator.
The quarterly performance included some unusual items, such as $31 million in add-backs related to costs from government investigations. Despite these costs, management has maintained its full-year 2025 guidance, projecting revenues between $3.3 billion and $3.4 billion, with adjusted EBITDA in the range of $675 million to $725 million. This guidance is consistent with market expectations and builds upon the company’s track record of 5.5% revenue growth over the last twelve months.
Acadia Healthcare’s shares rose approximately 5% on Thursday. The increase in stock price is attributed to the company’s trading at sub-6x EBITDA before the earnings announcement, which might have reflected an overly pessimistic market outlook. The quarter was impacted by around $20 million in startup losses, which are expected to decrease in the coming quarters. The second half of the year is anticipated to benefit from an increase in supplemental payments, partly from the Tennessee DPP program, which is likely to be recognized in the third or fourth quarter.
The analyst noted that while the quarter’s results were solid, the company is coming from a period of depressed expectations. The stock’s valuation is at multi-year lows, around 6x projected 2026 EBITDA, indicating that the market has factored in significant risks. The sentiment towards Acadia Healthcare is currently negative, but the analyst believes that the stock will improve over time if the company continues to meet these modest expectations and further clarity is provided regarding legal issues. The analyst suggests that the risks are largely known and the stock’s valuation has accounted for these factors. For deeper insights into Acadia Healthcare’s valuation and financial health metrics, including exclusive ProTips and comprehensive analysis, visit InvestingPro, where you’ll find detailed research reports and expert commentary on over 1,400 US stocks.
In other recent news, Acadia Healthcare reported its first-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $0.40, compared to the forecast of $0.39. However, revenue slightly missed projections, coming in at $770.5 million against an expected $777.25 million. Despite the revenue shortfall, the company reaffirmed its full-year 2025 revenue and EBITDA guidance, reflecting confidence in its strategic direction. Analysts from Mizuho (NYSE:MFG) Securities adjusted their outlook on Acadia Healthcare, reducing the price target from $37 to $32, while maintaining a Neutral rating due to challenges such as diminished patient volumes and an ongoing federal investigation into billing practices.
KeyBanc Capital Markets also revised its price target for Acadia Healthcare, cutting it from $65 to $55, but maintained an Overweight rating, expressing optimism in the company’s ability to achieve stronger performance in the latter half of the year. Meanwhile, Cantor Fitzgerald reiterated a Neutral rating with a $40 price target, highlighting the company’s growth strategies and potential risks, such as labor costs and market competition. Acadia Healthcare’s financial outlook remains cautious but stable, with analysts noting the company’s continued expansion efforts, including the addition of 378 new beds in the first quarter. These developments provide investors with insights into Acadia Healthcare’s recent performance and future prospects.
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