UBS raises Aveanna Healthcare target to $4.50, keeps Sell rating

Friday - UBS has updated its price target for Aveanna Healthcare Holdings Inc (NASDAQ:AVAH), raising it to $4.50 from the previous $3.20. Despite the increase, UBS analyst AJ Rice maintains a Sell rating on the company’s shares. Currently trading at $5.31, AVAH has shown remarkable momentum with a 33.5% gain in the past week alone. According to InvestingPro data, analyst targets for the stock range from $3.20 to $7.00, reflecting diverse market opinions. Rice’s commentary suggests that while the firm recognizes changes in management and approach to risk at Air Products and Chemicals, Inc. (NYSE:APD), which may lead to a more confident outlook on execution and growth, concerns remain regarding the potential for APD to cut its FY25 adjusted EPS guidance. InvestingPro analysis shows AVAH maintains a "GOOD" overall financial health score, though the company faces its own challenges with negative earnings of -$0.34 per share in the last twelve months.

The next earnings call will be the first with APD’s new CEO, during which investors will be looking for clarity on the company’s financial direction. For AVAH, investors should mark March 13, 2025, for the next earnings announcement. With revenue growth of 6.2% and a market capitalization of $1.02 billion, AVAH continues to expand its healthcare operations. Get deeper insights into AVAH’s financial metrics and 12+ additional ProTips with InvestingPro. UBS has slightly lowered its FY25 adjusted EPS estimate for APD to $12.60, a 2% decrease from the consensus of $12.68. The revised longer-term forecasts also show a decline of 2-4%. Since the last earnings report, APD’s stock has fallen by 12%, compared to a 1% decline for its peer, Linde (NYSE:LIN) PLC.

Investor expectations for APD’s adjusted EPS are currently between approximately $12.00 and $12.50, which is about 3% below the consensus at the midpoint. UBS’s estimate is slightly above this range, with the belief that a faster pace on cost savings could offer additional support. If investors consider this lower range beatable when results are presented, it could serve as a catalyst for increased comfort in investing in the stock.

UBS suggests that APD stock is nearing a support point that could encourage investor confidence, especially ahead of a potential guidance cut. The firm’s valuation uses a lower adjusted EPS multiple of around 23-24 times on the $12.25 midpoint, leading to a price target of approximately $290 per share, compared to the stock currently trading around $293.

The updated price target for APD by UBS is now set at $370 per share, indicating a potential upside of over 25% in the next year. This target is based on UBS’s more conservative FY26 adjusted EPS estimate, which remains about 4% ahead of the consensus, factoring in project starts and cost savings.

In other recent news, Aveanna Healthcare Holdings Inc reported impressive financial results for the fourth quarter of 2024, with earnings per share (EPS) of $0.05, surpassing the anticipated loss of $0.003. The company also exceeded revenue expectations, reporting $519.9 million against a forecast of $499.07 million. These results reflect Aveanna’s effective operational strategies and have boosted investor confidence. Additionally, Aveanna’s Private Duty Services segment saw significant growth of 10.1%, contributing to the company’s overall revenue increase of 8.6% year-over-year. The company’s full-year 2024 revenue reached $2.024 billion, marking a 6.8% increase from the previous year. Adjusted EBITDA for the fourth quarter rose by 42.6% year-over-year to $55.2 million, while the full-year adjusted EBITDA climbed by 31.8% to $183.5 million. Analysts have noted the company’s focus on expanding its preferred payer agreements, with plans to increase these to 30 by the end of 2025.

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