Acadia selloff today a buying opportunity, says RBC Capital

RBC Capital analyst Ben Hendrix recommends using the weakness today in shares of Acadia Healthcare as a buying opportunity. While news of the government investigation is an incremental negative, the 18% selloff is overdone and presents an attractive entry point, the analyst tells investors in a research note. The firm acknowledges the government probe and subpoena present a new overhang, but notes that investigations of this type are nothing “nothing new” for healthcare providers. The analyst expects an extended inquiry process with a “multi-year tail to resolution.” RBC thinks the sub-$20M settlement with the Justice Department Acadia announced Thursday is a better comp than the $400M adverse court ruling involving Desert Hills in New Mexico which ended in a $400M settlement for the range of outcomes that could result from the inquiry. RBC keeps an Outperform rating on Acadia with a $94 price target.