Shares of Acadia Healthcare Company Inc (NASDAQ:ACHC) saw a significant increase in pre-market trading on Tuesday, following an upgrade by KeyBanc Capital Markets. The brokerage firm raised the stock’s rating to ‘overweight,’ highlighting several key factors that support this upgraded assessment.
KeyBanc Analysts’ Rationale
The analysts at KeyBanc cited several critical factors for their upgrade of Acadia Healthcare Company Inc (NASDAQ:ACHC). Firstly, they noted that the company’s potential for a strong recovery in 2025 is well-supported by its expected EBITDA growth in 2026. This growth, combined with the company’s undervaluation relative to historical norms, presents an attractive investment opportunity.
Undervaluation and Promising Outlook
Acadia Healthcare Company Inc (NASDAQ:ACHC) is currently trading at approximately 8x EBITDA, which is below its historical average of over 10x. KeyBanc analysts believe that this gap will narrow, leading to a more favorable valuation for the company. They set a price target of $70, reflecting a 10x multiple on the projected 2026 EBITDA, compared to its three-year average range of 8-10x.
Maturation of Bed Additions and Moderating Startup Costs
The analysts outlined that Acadia’s 2026 performance is likely to benefit significantly from the maturation of bed additions made in 2024-2025. Additionally, they expect moderating startup costs to contribute positively to the company’s bottom line.
Potential Inflection Point for the Stock
KeyBanc flagged a potential inflection point for Acadia Healthcare Company Inc (NASDAQ:ACHC) as investor sentiment improves and visibility into the company’s recovery becomes clearer in the latter half of 2025. The brokerage firm believes that this improved sentiment will lead to increased confidence among investors, driving the stock price upwards.
Conservative Outlook Sets Up Favorable Setup for Acadia
While KeyBanc’s revised 2025 EBITDA estimate of $735 million is lower than the Street’s consensus estimate of $770 million, they believe that this already aligns with buy-side expectations. This conservative outlook provides a favorable setup for Acadia to exceed guidance if external pressures subside.
Resolution of Volume Disruptions and Regulatory Tailwinds
The analysts also highlighted several potential catalysts for growth in 2025. The resolution of volume disruptions from late 2024, combined with potential regulatory tailwinds such as Medicaid Directed Payment Programs, could amplify gains for the company.
Challenging Year for Behavioral Health Providers
In a broader context, KeyBanc described 2024 as a challenging year for behavioral health providers like Acadia. The analysts noted that negative press and heightened scrutiny had put pressure on the industry, leading to increased investor anxiety.
Investor Anxiety Has Likely Peaked
However, KeyBanc asserted that investor anxiety has likely peaked, as reflected by the stock’s resilience following a recent negative New York Times (NYSE:NYT) article. This suggests that investors are becoming increasingly optimistic about Acadia Healthcare Company Inc (NASDAQ:ACHC)’s prospects.
Conclusion
In conclusion, the upgrade of Acadia Healthcare Company Inc (NASDAQ:ACHC) by KeyBanc Capital Markets presents a compelling investment opportunity for those looking to capitalize on the company’s potential for growth. With its attractive valuation, promising outlook, and several key catalysts for growth, Acadia is well-positioned to exceed expectations in 2025.