Pacs Group initiated with an Overweight at Stephens

Stephens initiated coverage of Pacs Group (PACS) with an Overweight rating and $31 price target. Pacs represents “a new post-acute equity option for investors providing exposure to an operationally proven yet faster growth oriented business model” whose growth strategy focuses on a M&A-derived SNF turnaround model “that in many ways resembles the successful long-term strategy achieved” by peer Ensign Group (ENSG), the analyst tells investors. However, Pacs trades at about 2.1 turn discount compared to Ensign, “providing some capacity for further multiple expansion as the company fundamentally executes on its growth and margin initiatives,” the analyst added.