Chemed’s Roto-Rooter Growth Offsets Vitas Challenges, Supporting Buy Rating

Chemed (CHE – Research Report), the Healthcare sector company, was revisited by a Wall Street analyst yesterday. Analyst Joanna Gajuk from Bank of America Securities reiterated a Buy rating on the stock and has a $708.00 price target.

Joanna Gajuk’s rating is based on a combination of factors that highlight the strengths and potential of Chemed’s business segments. The Roto-Rooter division has shown a surprising improvement, with revenue growth projected between 2-3%, which is well-received given previous concerns about its growth potential. This positive outlook for Roto-Rooter offsets the less favorable guidance for the Vitas segment, which, despite a lower margin forecast, still presents a solid outlook with a 9% increase in census and 8% EBITDA growth.
Additionally, the overall consolidated numbers for Chemed are on track, with the company’s price objective remaining unchanged at $708. The improved outlook for Roto-Rooter, coupled with the stable hospice fundamentals of Vitas, supports the Buy rating. The valuation adjustments reflect the enhanced prospects for Roto-Rooter, which are expected to contribute positively to the company’s performance despite challenges in the Vitas segment.

CHE’s price has also changed slightly for the past six months – from $571.510 to $545.790, which is a -4.50% drop .