On Apr 15, 2015, Zacks Investment Research raised Acadia Healthcare Company Inc ACHC to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
The upgrade primarily reflects Acadia’s improving growth prospects, driven by accretive acquisitions as well as reasonable organic growth. Through 2014, the company completed five acquisitions which brought 27 facilities and over 1,400 beds to the company. The company also added 378 beds at its existing facilities during the year.
In Jul 2014, Acadia acquired Partnerships in Care (PiC) – a UK-based independent behavioral health provider. The company gained 23 facilities and over 1,200 licensed beds from the takeover.
In Oct 2014, Acadia announced a definitive agreement to buy CRC Health Group, in a bid to expand its position in addiction and mental health services. The deal, valued at $1.175 billion, is Acadia’s largest in its history and upon completion will add 35 inpatient facilities with approximately 2,400 beds and 81 comprehensive treatment centers.
In Mar 2015, Acadia announced the acquisition of Quality Addiction Management (QAM), an operator of seven comprehensive treatment centers in Wisconsin for $53 million. The deal is expected to prove accretive to Acadia’s 2015 EPS by 3 to 4 cents.
Currently, for full-year 2015, Acadia expects adjusted EPS in the range of $2.03–$2.10, reflecting growth of approximately 32–36% over 2014. For the first quarter of 2015, the company expects EPS in the band of 40–41 cents. Based on management’s projection, EPS in the first quarter of 2015 will exhibit an increase of 43%–46% on a year-over-year basis.
Estimate Revisions
The Zacks Consensus Estimate for fiscal 2015 remained steady at $2.10 per share over the last 30 days. However, for fiscal 2016, the Zacks Consensus Estimate climbed a penny to $2.61 per share over the same time frame.
Other Stocks to Consider
One may also consider other players in the industry that look attractive at current levels. These include Inogen INGN, Cardiovascular Systems CSII and Health Net HNT. All the stocks carry the same Zacks Rank as Acadia.
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