Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Addus HomeCare retains 'buy' rating despite its New York State Personal Care assets divestiture

Published 2024-05-21, 03:38 p/m
ADUS
-

On Tuesday, Addus HomeCare (NASDAQ:ADUS), a provider of home care services, maintained its Buy rating and a price target of $119.00, reflecting confidence in the company's financial prospects despite the recent divestiture of its New York State Personal Care Services (PCS) assets.

The divestiture, announced earlier today, involves the sale of Addus's NYS PCS assets for a sum that could reach $23 million. The final amount Addus will receive depends on specific outcomes tied to changes in New York's Fiscal Intermediary process, which are part of the state's 2025 budget.

While the sale might appear to significantly impact Addus's revenue, with an approximate 9% annual reduction based on the 2023 actual figures, the effect on the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) is estimated to be more moderate. Analysts project only a 2-3% annualized EBITDA impact from the transaction.

The decision to sell these assets comes as Addus continues to streamline its operations and focus on its core business strategies. The company's management has not commented on the specifics of the divestiture or its anticipated use of the proceeds.

Investors reacted to the news with measured interest, as the stock maintained its position in the market without significant fluctuations. The steady price target suggests that analysts believe the divestiture will not derail the company's long-term growth trajectory.

InvestingPro Insights

With Addus HomeCare (NASDAQ:ADUS) making strategic moves to enhance its operations, it's crucial to consider the latest data and insights that could influence investor decisions. According to InvestingPro, Addus is currently trading at a P/E ratio of 27.16, which is lower than the adjusted P/E ratio for the last twelve months as of Q1 2024, indicating a potential undervaluation relative to near-term earnings growth. The company's low PEG ratio of 0.9 further suggests that its earnings growth rate is favorable when compared to its P/E ratio.

From a performance standpoint, Addus shows a strong return over the last three months with a 21.02% increase, and the trend continues over the last six months, boasting a 26.7% uptick. These figures align with the InvestingPro Tip that highlights the stock's low price volatility, making it an attractive option for investors seeking stable growth. Additionally, the company's solid revenue growth of 11.45% over the last twelve months, coupled with an impressive gross profit margin of 32.41%, reflects its operational efficiency and market position.

For investors looking to delve deeper into Addus HomeCare's financials and stock performance, InvestingPro offers a wealth of additional tips. In fact, there are 12 more InvestingPro Tips available that can provide a more comprehensive understanding of the company's potential. To access these insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which could be a valuable tool for those seeking to make informed investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.