Legg Mason downgrades Chemed Corp. (CHE) to hold from buy.
Analyst Eric Gommel says the stock is fully valued. He notes the stock is up 21% on a split-adjusted basis since the company posted earnings May 3, is now above his $43.50 target.
He still likes the company's VITAS hospice business and notes the business is the oldest and largest for-profit hospice provider in the U.S., with a deep presence in major metropolitan markets and in key states such as Florida.
Gommel thinks VITAS already has infrastructure built to handle its growth and does not have issues with Medicare caps that other public players have had to endure. He maintains his $1.75 2005 earnings per share estimate and his $2.17 2006 earnings per share estimate.