Avondale Initiates Kindred (KND) Coverage With Outperform

Avondale Partners began the coverage of Kindred Healthcare (NYSE: KND)(FREE stock trend analysis) with an Outperform rating. Kindred is a Kentucky-based provider of the long-term acute care, rehabilitation therapy and skilled nursing facilities. The set price target of $24 is nearly 40% higher than the current price, which is 12.4x the FY10 EPS estimate.

The key growth drivers for Kindred are consistent quality, service offerings that cover most of the post-acute spectrum, long-term acute care and transitional care. The risks posed to Kindred are primarily caused by the proposed Medicare reimbursement cuts. Moreover, the final healthcare reform legislation will decide whether the moratorium on the long-term acute care will continue or not.