Analyst Joanna Gajuk of Bank of America Securities reiterated a Buy rating on Chemed (CHE – Research Report), retaining the price target of $708.00.
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Joanna Gajuk’s rating is based on a combination of factors that highlight Chemed’s strong performance and potential for future growth. The company’s Q1 adjusted EBITDA exceeded expectations, primarily driven by the Vitas segment, which demonstrated impressive margin improvements. Additionally, the Roto-Rooter division showed signs of recovery, with revenue growth year-over-year, reversing the declines observed in the previous year.
Vitas revenues, while slightly below estimates, still showed significant growth, with a notable increase in census and admissions. The Medicare rate update, although slightly lower than the previous quarter, was offset by better-than-expected margins due to a favorable patient mix. Meanwhile, Roto-Rooter’s revenue growth was driven by increased commercial and residential activities, particularly in excavation and water restoration jobs. Despite some margin pressure in the Roto segment due to mix changes, the overall performance aligns with consensus expectations, supporting the Buy rating.
Gajuk covers the Healthcare sector, focusing on stocks such as UnitedHealth, Chemed, and HCA Healthcare. According to TipRanks, Gajuk has an average return of -1.6% and a 49.40% success rate on recommended stocks.