Chemed (CHE) has received a new Hold rating, initiated by Jefferies analyst, Brian Tanquilut.
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Brian Tanquilut has given his Hold rating due to a combination of factors affecting Chemed’s financial outlook. One of the primary concerns is the impact of the Medicare cap, particularly in Florida, which is expected to continue affecting the company’s EBITDA growth into 2026. This issue is likely to cause a temporary slowdown in revenue growth and margin compression, making it challenging for Chemed to meet the market’s current growth expectations.
Despite these short-term challenges, Chemed’s long-term fundamentals remain strong, with the hospice industry poised for steady growth driven by demographic trends. Additionally, Chemed’s Roto-Rooter segment, while facing near-term headwinds, is expected to benefit from long-term demand due to an aging housing stock. The company’s solid balance sheet and strong free cash flow provide flexibility for strategic acquisitions and share buybacks, supporting its long-term growth strategy. However, given the current uncertainties, a Hold rating is deemed appropriate.
Based on the recent corporate insider activity of 40 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of CHE in relation to earlier this year.