Enhabit initiated with an Underperform at SVB Securities

SVB Securities analyst Whit Mayo initiated coverage of Enhabit with an Underperform rating and $10 price target. The firm forecasts 2024-2025 EBITDA 28%-33% below consensus and its analysis frames an excessively high view from the Street on the earnings power of this business. Enhabit is trapped in a vortex of Medicare Advantage challenges with elevated reimbursement tail-risk, magnified by a growing leverage profile, SVB says. The firm sees the near- to intermediate-term earnings skew tilted to the downside, increasing the downside risk for margins and the forward valuation. This drives a reasonably unattractive 0.9:1 upside/downside skew, it adds.