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On Monday, Stephens, an investment firm, adjusted its outlook on PACS Group (NYSE: PACS), dropping the price target on the company's shares to $31.00 from the previous target of $48.00. Despite the reduction, the firm maintained an Overweight rating on the stock.
The adjustment comes as PACS Group announced a delay in filing its 10-Q report for the fiscal quarter that ended on September 30, 2024. The company stated it would file the report "as soon as practicable" but acknowledged it would not meet the extended deadline of November 19, 2024, set by SEC Rule 12b-25.
In response to the filing delay, PACS Group also amended its Credit Agreement, extending the covenant related to the delivery of its unaudited financial statements. Originally required within 45 days of a fiscal quarter's end, the company now has until November 21, 2024, to provide the financial statements for the quarter ended September 30, 2024. This deadline may be extended further if agreed upon in writing by the Lenders.
The revision of the price target by Stephens was influenced by the current uncertainties surrounding PACS Group's financials. The company is undergoing an internal audit committee investigation and is subject to an ongoing federal inquiry. These factors have led to reduced visibility into the company's audited financials, prompting Stephens to adjust their price target accordingly while awaiting the release of the third-quarter 10-Q report. The firm reiterated its Overweight rating, indicating a positive outlook on the stock despite the challenges faced.
In other recent news, PACS Group, a skilled nursing care facilities provider, has amended its credit agreement with Truist Bank and other lenders, extending the deadline for the submission of its unaudited quarterly financial statements.
This change provides PACS Group with more flexibility in reporting its financials. In addition to this, PACS Group announced a delay in its Q3 financial results due to a federal investigation into reimbursement and referral practices. Despite this, the company is expected to report over $600 million in cash and available liquidity by the end of the quarter.
Furthermore, PACS Group has expanded its operations by acquiring 56 facilities across six states. Analysts from JPMorgan, UBS, and Citi have issued Overweight and Buy ratings for PACS Group, citing the company's growth strategy and demographic trends as key factors. Lastly, PACS Group reported an adjusted EBITDA of $99.7 million for Q2 2024, leading to an upward revision of its 2024 guidance.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on PACS Group's current situation. The company's market capitalization stands at $2.7 billion, with a P/E ratio of 58.75, reflecting the market's current valuation of the stock. Despite the challenges highlighted in the article, PACS has shown strong revenue growth, with a 29.08% increase in quarterly revenue as of Q2 2024.
InvestingPro Tips indicate that PACS stock has taken a significant hit recently, trading near its 52-week low. The stock's price has fallen by 20.72% in the past week and 58.44% over the last month. This aligns with the article's mention of uncertainties surrounding the company's financials and the ongoing investigations.
On a positive note, InvestingPro Tips also reveal that 4 analysts have revised their earnings upwards for the upcoming period, suggesting some optimism about the company's future performance. Additionally, the company has been profitable over the last twelve months, with analysts predicting continued profitability this year.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for PACS, providing deeper insights into the company's financial health and market position.
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