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Why Acadia Healthcare Company Inc. Is Falling Today

By Brian Feroldi - Nov 5, 2018 at 3:55PM

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Shares plunge after a mildly bearish analyst report surfaces. Here's what investors need to know.

What happened

Shares of Acadia Healthcare Company Inc. (ACHC -0.67%), a leading provider of psychiatric and chemical dependency services, fell as much as 13% on Monday. Shares were down about 9% as of 3:21 p.m. EST. The drop can be traced to the publication of a research report by a group of analysts.

So what 

News broke today that analysts at Cantor Fitzgerald recently reaffirmed their "hold" rating on Acadia's stock. The analysts also released a near-term price target of $39.00. 

In the report, analysts stated that they rated Acadia as neutral because of the "uncertainty associated with the recovery of its U.K. business." The company's U.K. business accounts for about 40% of sales, so the analysts felt it was prudent to be more cautious on the stock. 

Yellow, orange, and red bar chart with arrow crashing into the ground

Image source: Getty Images.

Canto's price target of $39 represents a double-digit-percentage decline from Friday's closing price of $44.75. Shares are taking a step back today in response to the mildly bearish report.

Now what

The last few years haven't been kind to Acadia's shareholders. The stock is now down about 50% from its all-time high that was reached in 2015, so it's been a trying time for investors.

After today's bashing, the stock now trades for less than 15 times next year's earnings estimates. With current estimates calling for double-digit profit growth over the next five years, it's possible that Acadia might be a value stock that is worth considering.

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