Stifel starts AdaptHealth at buy; PT $17

Stifel initiated coverage of AdaptHealth (NASDAQ:AHCO) with a “buy” rating and $17 price target. The stock closed at a 52-week high of $13 on Jan. 30.

“AdaptHealth is a unique asset poised to capitalize on an ongoing secular shift to home health care,” writes analyst Mathew Blackman, noting that the company offers a broad suite of medical products for use in the home, with a focus on respiratory, mobility, and an emerging portfolio of medical supplies for chronic disease.

Since being founded in 2012, AdaptHealth has “thrived in what can only be described as a challenging home health provider market,” Mr. Blackman said. “Multiple rounds of broad-based, significant reimbursement cuts have compressed provider profitability and contracted the number of viable home medical equipment business models.”

However, he said AdaptHealth’s technology platform and crisp and consistent execution against an aggressive organic and inorganic growth strategy have more than overcome well-vetted industry headwinds. “Most importantly, this has created a foundation for continued robust revenue and profit growth as the company expands its geographic footprint and product portfolio,” he added.

“With strong, near-20% top-line growth and expanding profit margins on tap, we believe the shares have meaningful upside from current levels,” Mr. Blackman said.

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