Almost Family (AFAM) Reiterated as Top Pick At Jefferies

Jefferies analyst, Brian Tanquilut, highlighted Almost Family (NASDAQ: AFAM) as a top pick in 2016 as 3 new deals should drive earnings growth acceleration and upside vs. low Street expectations. With its low valuation (14x FY16E EPS) and solid ST and LT outlooks, he believes AFAM is a compelling investment.

Since 08/15, AFAM has completed three sizeable acquisitions (WillCare, Black Stone, and Long Term Solutions), with mgmt. deploying ~$125MM on deals expected to contribute ~$1.00 of EPS (vs. $2.12 FY15E EPS). This significant earnings accretion, coupled with the strategic contributions and likely incremental synergies these assets bring, should enable AFAM to deliver accelerated EPS growth over the near term.

Ongoing changes to the H/C system (bundles, ACOs, value-based purchasing) are beneficial for quality providers of this low-cost care service. The reimbursement outlook for home health is also fairly benign, which provides a fertile environment for a more aggressive M&A strategy in '16. AFAM's entry into the in-home assessment business (for insurance companies) also provides revenue diversification, margin enhancement, and incremental growth opportunities that are underappreciated by investors.

No change to Buy rating or $58 PT.

For an analyst ratings summary and ratings history on Almost Family click here. For more ratings news on Almost Family click here.

Shares of Almost Family closed at $39.94 yesterday.

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