On Tuesday, BofA Securities adjusted its outlook for Addus HomeCare Corporation shares, increasing the firm's price target on the stock to $118 from the previous $115. The investment firm has maintained a Buy rating for the NASDAQ-listed company, citing better-than-expected earnings and a strong growth profile.
Addus HomeCare reported adjusted EBITDA that was $3 million or 11% above the consensus and 5% above BofA Securities' estimate, primarily due to significantly improved margins. Revenues met expectations, while adjusted earnings per share were 10% higher than the consensus.
The positive financial results were attributed to stronger revenues in Personal Care and hospice services, which helped to balance out weaker performance in home health relative to consensus expectations.
In response to the earnings beat, BofA Securities has raised its EBITDA estimates for Addus HomeCare. The new price objective of $118 reflects a valuation of 14.4 times the projected 2024 EBITDA, a slight decrease from the previous multiple of 14.7 times. The firm reiterated its Buy rating, highlighting the company's attractive growth prospects and potential for upside from strategic deals.
The analyst noted Addus HomeCare's clean balance sheet and robust cash flows as key factors supporting the positive outlook. These financial strengths are seen as providing a solid foundation for the company to continue its growth trajectory and pursue beneficial acquisitions in the future.
InvestingPro Insights
InvestingPro data reveals that Addus HomeCare Corporation (ADUS) is trading at a Price-to-Earnings (P/E) ratio of 25.11, which adjusts to a slightly lower 23.57 when considering the last twelve months as of Q4 2023. This places the company at an attractive valuation point, especially when paired with a PEG Ratio of 0.73 over the same period, suggesting that the stock may be undervalued relative to its earnings growth.
With a robust revenue growth of 11.31% in the last twelve months as of Q4 2023, and a solid operating income margin of 9.16%, Addus HomeCare's financials complement the positive sentiment from BofA Securities. The company's ability to generate strong cash flows, which can sufficiently cover interest payments, is an essential factor for investors considering the stability and sustainability of its earnings.
InvestingPro Tips highlight that analysts have revised their earnings upwards for the upcoming period and predict the company will be profitable this year, which aligns with BofA Securities' optimistic view. Moreover, the stock is trading near its 52-week high, reflecting investor confidence in the company's market position and growth potential. For those interested in deeper analysis, there are additional InvestingPro Tips available, providing further insight into Addus HomeCare's performance metrics and investment potential. Be sure to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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