UBS analyst, A.J. Rice, raised his PT on Civitas Solutions (NYSE: CIVI) after the company beat his below consensus EPS estimate. Notes follow:

Civitas posted FQ4 adj EPS of $0.17 (excluding $0.02 of stock comp), which compares to consensus of $0.17. Adjusted EPS also excludes $1.0 mln of secondary offering costs and $1.7 mln of executive retirement compensation. Adjusted EBITDA increased 12.8% to $37.9 mln and was $0.9 mln ahead of consensus.

CIVI highlighted that overall pricing should remain positive for FY16 given the generally positive state budget trends. In addition, CIVI advised that OH, NJ, PA, GA, and CA are states that are planning notable increases in their respective I/DD waiver spending programs. On the flip side, CIVI noted that budget pressures in WV have led the state to implement caps on I/DD spending that would restrict allowable costs (CIVI gets $70 mln in I/DD revs in WV and ests a $7-8 mln rev impact). Advocacy groups are challenging the proposal in court, with an initial decision expected soon.

Total revs advanced 7.3% Y/Y (8.7% adjusted for ARY closures) to $346.0 mln, which was $3.2 mln below our est/cons of $349 mln due to weaker revs in its ARY segment, particularly in the states that CIVI is exiting. Organic rev growth was 3.8% in 4Q15, with acquisitions contributing 4.9%. Management highlighted that I/DD revs grew 3.8% organically, while SRS segment revs increased 4.3%. ARY increased 4.3% in nondivested states.

CIVI introduced FY16 adjusted EBITDA guidance of $161 mln to $165 mln (cons: $164 mln).

No change to Buy rating but raising PT to $29.50 from $27 even though guidance bracketed consensus.

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Shares of Civitas Solutions closed at $26.35 yesterday.