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On Monday, Chemed Corporation (NYSE:CHE), an $8.12 billion market cap company, saw its price target increased by RBC Capital Markets following a robust first-quarter earnings report and a positive forecast for its Roto-Rooter business. The firm’s analyst, maintaining an Outperform rating, raised the price target to $674.00, up from the previous $667.00. According to InvestingPro data, analysts maintain a Strong Buy consensus with price targets ranging from $650 to $708.Want deeper insights? InvestingPro reveals 12 additional investment tips for Chemed, including crucial information about the company’s dividend history and financial health metrics.
The analyst provided insights into the decision, highlighting the company’s solid performance in the first quarter, which saw revenue growth of 8.52% and an impressive profit margin of 34.82%. The report also detailed an optimistic outlook for Chemed’s Roto-Rooter segment, which is expected to contribute to future growth.
Addressing concerns related to potential Medicare cap limitations, the analyst suggested that these worries are exaggerated. Chemed has been strategically managing this issue through shorter-stay hospital admissions in certain markets, which is seen as a proactive approach to navigate the regulatory environment.
The revised price target is based on an updated 2025 EBITDA estimate, which has led to a slightly higher valuation. According to the analyst, this adjustment reflects confidence in the company’s ability to continue delivering strong financial results.
Chemed, known for its Roto-Rooter services and VITAS Healthcare, a provider of end-of-life care, has been actively managing its business segments to optimize performance and mitigate regulatory impacts. The company’s strategic efforts appear to be recognized by RBC Capital Markets, as reflected in the updated price target and reaffirmed Outperform rating.
In other recent news, Chemed Corporation reported its first-quarter 2025 financial results, which exceeded analysts’ expectations. The company achieved an earnings per share (EPS) of $5.63, surpassing the projected $5.51. Additionally, Chemed’s revenue reached $646.9 million, outstripping the anticipated $636.8 million. The VITAS Healthcare segment contributed significantly to these results, with a 15.1% increase in net revenue year-over-year. However, the Roto Rooter division faced some challenges, showing a modest 3.1% growth in gross branch revenue but experiencing a 2.4% decline in adjusted EBITDA. Despite these positive earnings, Chemed’s stock experienced a decline of 5.15% in after-hours trading. Looking ahead, Chemed executives plan to provide updated earnings guidance in June 2025. Analysts from RBC Capital Markets have shown interest in the company’s Medicare cap management strategy and its impact on future growth.
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