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Acadia Healthcare Company, Inc. (ACHC) - free report >>
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Acadia Healthcare Company, Inc. (ACHC) - free report >>
Petco Health and Wellness Company, Inc. (WOOF) - free report >>
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Acadia Healthcare (ACHC): Strong Sell on Weak FY16 View
On Aug 24, Zacks Investment Research downgraded Acadia Healthcare Company Inc (ACHC - Free Report) to a Zacks Rank #5 (Strong Sell). The downgrade reflects negative estimate revision following unimpressive full-year 2016 outlook and growing near-term headwinds.
Why the Downgrade?
The Zacks Consensus Estimate for fiscal 2016 contracted almost 6.7% (19 cents) to $2.64 per share over the last 30 days. Similarly, for fiscal 2017, the Zacks Consensus Estimate declined 4.1% (14 cents) to $3.22 per share over the same time frame.
Key Factors
Despite reporting strong second-quarter 2016 results, Acadia Healthcare lowered earnings guidance for full-year 2016. The company now expects earnings in the range of $2.63–$2.65 per share, down from $2.81--$2.86 given earlier.
The guidance cut was primarily due to foreign exchange volatility and delayed approval from CMA (Competition and Markets Authority) related to the Priory Group acquisition in the U.K.
Acadia Healthcare plans to divest 19 of its Priory and PiC healthcare facilities with approximately 750 beds. These facilities generate aggregate annual revenue of approximately $132 million and adjusted EBITDA of $39 million. The company believes that the planned divestiture will help it to address CMA’s concerns and subsequently allow it to complete the Priory acquisition.
ACADIA HEALTHCR Price and Consensus
ACADIA HEALTHCR Price and Consensus | ACADIA HEALTHCR Quote
We believe that the lack of visibility in the company's UK operations is a major concern, which will limit Acadia’s growth prospects in the near term. However, addition of new beds at Acadia’s facilities, opening of de novo facility, and new acquisitions in US are expected to fortify the company’s market position in the rest of full-year 2016.
Stocks to Consider
One may consider better-ranked players in the industry like INC Research Holdings (INCR - Free Report) , AMN Healthcare and VCA Inc. (WOOF - Free Report) . While INC Research sports a Zacks Rank #1 (Strong Buy), both AMN Healthcare and VCA carries a Zacks Rank #2 (Buy).
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