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.
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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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.
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).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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