Baird: Acadia Healthcare Should Sustain High-Single-Digit Same-Store Revenue Growth

Acadia Healthcare Company Inc ACHC should sustain high-single-digit same-store revenue growth on recent momentum and high visibility around new bed additions, according to a note from Baird.

Analyst Whit Mayo reiterated his Outperform rating on the stock as he feels "1) 2Q feels like it's lining up well; (2) management remains optimistic on CMA clarity by mid-July; (3) we sense several NFP JVs are in the works."

Saying Brexit is probably better odds than a coin toss, the analyst thinks resolution on the issue will be helpful. In addition, the CMA review of the Priory transaction should end by mid-July.

"Management's confidence level around clearing this event strikes us as high. We have high conviction in obtaining 2H synergies," Mayo wrote in a note.

"We'd guess 2Q consensus contemplates ~8 percent SS growth," the analyst highlighted.

Related Link: Acadia Healthcare Increased Class 1 Directors Serving On Board To 3 From 2

Meanwhile, press reports suggest Aurora is running a sales process and Mayo struggles to believe it can remotely be on a $150 million EBITDA run-rate. Given elevated seller expectations, unique founder/CEO dynamics, ACHC's leverage and potential FTC review with UHS, the analyst is not convinced that asset trades this year.

"ACHC remains the fastest organic/inorganic grower we cover, sells for below 18x EPS (without acquisitions) and barely a premium to the market, 2Q historically is a seasonally strong quarter, IMD remains a tailwind, and we think ACHC can reprice higher post-Brexit and CMA," Mayo added.

Shares of Acadia Healthcare closed Monday's regular trading session at $59.71, while Mayo has a price target of $69. At time of writing Tuesday, Acadia was down 0.69 percent at $59.30.