UBS maintained a Buy rating on Civitas Solutions (NYSE: CIVI), and cut the price target to $28.00 (from $29.50), following the company's 1Q earnings report. CIVI posted adjusted EBITDA down to $36.3 mln, which was $1.8 mln below consensus' estimates. Adjusted EPS was $0.16, which compares to UBS' estimate of $0.20. CIVI kept full year guidance unchanged.

Analyst A.J. Rice commented, "CIVI posted F1Q16 adj EBITDA down 10.4% Y/Y to $36.3 mln, which was $2.3/$1.8mln below our est/cons. Most of the Y/Y decline was related to $3.3 mln of higher onetime health cost benefits in F1Q15 vs this year, the divestiture of ARY ops ($1.5 mln Y/Y headwind), and $0.7 mln of higher start-up exps. FQ1 adj EPS was $0.16 (excl stock comp), which compares to our est of $0.20. Adj EPS also excludes $2.1 of losses related to ARY divestitures, a $1.3 mln loss on sale of an ARY business in NC, and a $2.9 mln gain related to a reversal of contingent consideration on an acquisition. On the positive side, CIVI kept full yr guidance unchanged. Also, CIVI has completed acquisitions representing annualized revs of $19.2 mln thus far in the FY16 and reportedly has a full deal pipeline. On WVa, where CIVI has been facing I/DD reimbursement pressure, advocacy groups are challenging the payment cuts in court, with a hearing expected on March 11. FY15 guidance assumes the current reductions in WVa remain in place ($7-8 mln rev FY16 headwind). Overall, F1Q was seen as slightly tougher than expected, with the WVa headwind somewhat worse, the Y/Y drag of ARY divestitures higher, and deal activity getting off to a slower start versus last year."

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Shares of Civitas Solutions closed at $19.45 yesterday.