Gentiva Health Services (GTIV) was upgraded from Neutral to Outperform based on its strong revenues and strategic acquisitions. The company’s second quarter earnings surpassed the Zacks Consensus Estimate but lagged
the year ago results on the back of lower revenues, particularly in the Home Health segment.
The company offers skilled nursing and therapy services, paraprofessional nursing services and homemaker services primarily to adult and elderly patients through licensed and Medicare-certified agencies. It serves patients in more than 420 locations across 41 states as of June 30, 2012, and operates in the Home Health and Hospice segments. Gentiva reported second quarter 2012 operating net earnings of $0.35 per share, $0.07 ahead of the Zacks Consensus Estimate of $0.28, but lower than the year ago quarter level of $0.47 per share.
Our six month target price of $13.00 equates to 10.5x our earnings estimate for 2012. This price target implies an expected total return of 18.1% over that period. This is consistent with our Outperform
recommendation on the shares.
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