UBS Remains Bullish as Civitas Solutions (CIVI) Reaffirms Full Year Guidance

UBS maintained a Buy rating on Civitas Solutions (NYSE: CIVI), and cut the price target to $28.00 (from $29.50), following the company's 1Q earnings report. CIVI posted adjusted EBITDA down to $36.3 mln, which was $1.8 mln below consensus' estimates. Adjusted EPS was $0.16, which compares to UBS' estimate of $0.20. CIVI kept full year guidance unchanged.

Analyst A.J. Rice commented, "CIVI posted F1Q16 adj EBITDA down 10.4% Y/Y to $36.3 mln, which was $2.3/$1.8mln below our est/cons. Most of the Y/Y decline was related to $3.3 mln of higher onetime health cost benefits in F1Q15 vs this year, the divestiture of ARY ops ($1.5 mln Y/Y headwind), and $0.7 mln of higher start-up exps. FQ1 adj EPS was $0.16 (excl stock comp), which compares to our est of $0.20. Adj EPS also excludes $2.1 of losses related to ARY divestitures, a $1.3 mln loss on sale of an ARY business in NC, and a $2.9 mln gain related to a reversal of contingent consideration on an acquisition. On the positive side, CIVI kept full yr guidance unchanged. Also, CIVI has completed acquisitions representing annualized revs of $19.2 mln thus far in the FY16 and reportedly has a full deal pipeline. On WVa, where CIVI has been facing I/DD reimbursement pressure, advocacy groups are challenging the payment cuts in court, with a hearing expected on March 11. FY15 guidance assumes the current reductions in WVa remain in place ($7-8 mln rev FY16 headwind). Overall, F1Q was seen as slightly tougher than expected, with the WVa headwind somewhat worse, the Y/Y drag of ARY divestitures higher, and deal activity getting off to a slower start versus last year."

For an analyst ratings summary and ratings history on Civitas Solutions click here. For more ratings news on Civitas Solutions click here.

Shares of Civitas Solutions closed at $19.45 yesterday.

You May Also Be Interested In

• Robinhood Markets (HOOD) PT Raised to $130 at Cantor Fitzgerald
• FedEx (FDX) PT Lowered to $424 at Bernstein SocGen Group
• Allegro MicroSystems (ALGM) PT Raised to $70 at TD Cowen: 'Secular + Cyclical Growth Combo'