Zacks Investment Research downgraded shares of Gentiva Health Services Inc. (GTIV) from NEUTRAL to UNDERPERFORM on May 28, 2013, with a target price of $9.00.
We are downgrading our recommendation on Gentiva to Underperform based on its weak first quarter earnings on the back of consistently declining revenues along with uncertain regulatory environment and legal problems. The company's first quarter earnings lagged the Zacks Consensus Estimate as well as the year-ago quarter's earnings due to lower revenues in both operating segments. Cash position and shareholder equity also declined, although debt balance and operating cash outflow improved year over year. Moreover, the strategic divestitures are expanding market share, while the focus on specialty services is expected to enhance margins in the long term. However, as the negatives are outweighing the positives, we expect low growth potential for the company in the near- to intermediate-term.
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