Why Aveanna Healthcare Stock Got Sick Again Today

The analyst price target cuts just keep coming for the loss-making company.

The analyst price target cuts just keep coming for the loss-making company.

What happened

To put it mildly, Aveanna Healthcare Holdings ( AVAH -9.55% ) has not been having a good week.

Two days after whiffing on its latest quarterly results, the company was stung on Thursday by the latest in a string of analyst price target downgrades. As a result, its share price tumbled by nearly 10% on the day.

So what

The latest analyst to ding Aveanna stock is RBC Capital’s Frank Morgan. Friday morning, he took a big pair of shears to his price target, cutting it to $9 per share from the previous $16.

Person in leg cast lying on couch, with a crutch propped up nearby.

Image source: Getty Images.

Still, that new level is more than double the home healthcare specialist’s current share price, so Morgan is leaving his outperform (buy) recommendation intact. Much of this is connected to his revised full-year 2022 estimate for earnings before interest, taxes, depreciation, and amortization (EBITDA). This has been reduced to $198 million; formerly it was $215 million. 

Morgan certainly has plenty of precedent backing his move. A clutch of other analysts also trimmed their Aveanna price targets immediately following that earnings report.

One that did so while also downgrading her recommendation was Bank of America Securities prognosticator Joanna Gajuk. She now feels that the stock is only a neutral, whereas before she tagged it with a buy. She also cut her price target nearly in half, to $5.50 per share from the preceding $10.

Now what

Those gloomy changes in outlook are entirely understandable. On Tuesday, Aveanna delivered fourth-quarter and full-year figures that didn’t come close to hitting the average analyst estimates for the former period. Worse, the company suffered a dip in revenue on a year-over-year basis, and reported a much deeper net loss (over $126 million, against fourth quarter 2020’s less than $10 million). 


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