Zacks Investment Research upgraded shares of Gentiva Health Services Inc. (GTIV) from NEUTRAL to OUTPERFORM on August 23, 2012, with a target price of $13.00.
We are upgrading our recommendation on Gentiva to Outperform based on its strong revenues and strategic acquisitions. The company's second-quarter earnings surpassed the Zacks Consensus Estimate but lagged the year-ago quarter's earnings on the back of lower revenues, particularly in the Home Health segment. However, a reduced debt balance improved its financial leverage coupled with an improvement in net cash from operating activities and free cash balance that increased significantly on the back of better operating performance. Additionally, the decision to divest some of its branches in Louisiana has also left the company with a sufficient amount of cash. Moreover, the company has taken steps to restructure its operations, the outcome of which should be apparent in the forthcoming quarters. Overall, we expect a strong growth potential for the company in the long term.
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