UBS Raises Price target on Acadia Healthcare (ACHC) Following Announced Priory Group Acquisition
UBS reiterated a Buy rating on Acadia Healthcare (NASDAQ: ACHC), and raised the price target to $85.00 (from $80.00), following the company's announced acquisition of privately held Priory Group. The Acquisition will add 322 facilities and 7,200 beds and bring its current rev run-rate in the UK from $392 mln to $1.26 bln.
Analyst A.J. Rice commented, "On Jan 4, ACHC announced it had agreed to acquire privately held Priory Group, which will add 322 facilities and 7,200 beds and bring its current rev run-rate in the UK from $392 mln to $1.26 bln. ACHC is forecasting the transaction will be $0.38-$0.42 accretive in the 12 months post the expected close on Feb 16. Considering the size of the transaction, we are no longer assuming that ACHC completes any new deals in 2016 (our model had assumed four small deals in the U.S. mental health segment). After adjusting our 2016 EPS ests for the timing of the close and stripping out previously expected acquisitions, we now estimate our 2016 EPS will increase by $0.21 to $2.90. We would also note that ACHC has in the past issued somewhat conservative initial guidance (usually along with 4Q earnings in February), which we believe is reflected in our revised pro-forma estimates."
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Shares of Acadia Healthcare closed at $61.56 yesterday.