Michael Petusky, an analyst from Barrington, maintained the Buy rating on ModivCare (MODV – Research Report). The associated price target was lowered to $6.00.
Michael Petusky has given his Buy rating due to a combination of factors that highlight ModivCare’s potential for growth and profitability. Despite the mixed results in the fourth quarter, where service revenue was slightly below expectations, the company showed strong profitability with an adjusted EPS that surpassed both the firm’s and consensus estimates. This indicates a solid operational performance, particularly in terms of adjusted EBITDA, which exceeded expectations significantly.
Additionally, while ModivCare has not provided formal guidance for FY/25, the company has made strategic shifts in its business model, such as transitioning shared risk contracts to fee-for-service agreements, which are expected to enhance cash flow visibility. Although the investment carries high risk due to various uncertainties, the potential upside is substantial, with a 69% increase to the revised price target of $6. This target is based on a multiple of the projected adjusted EBITDA, accounting for anticipated net debt and the value of the company’s Matrix investment.
Based on the recent corporate insider activity of 24 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of MODV in relation to earlier this year.
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