What Happened?
Shares of healthcare services company Chemed Corporation (NYSE: CHE) fell 4.2% in the afternoon session after Jefferies downgraded the stock to 'Hold' from 'Buy' and slashed its price target.
The firm lowered its price outlook on the shares to $475 from a previous target of $550. The downgrade was driven by growing concerns about Chemed's Roto-Rooter business segment. The analyst cited ongoing pressures on the unit's profitability and a lack of a clear view into when conditions might improve. According to the research note, a return to normal growth for the Roto-Rooter business in 2026 now seemed unlikely, marking a more negative outlook than the firm's previous stance.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Chemed? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Chemed’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 14.7% on the news that the company provided a negative update on its full-year 2025 guidance, citing issues with its VITAS hospice business.
The company announced that it now anticipates a significant Medicare Cap revenue limitation for its VITAS subsidiary in Florida. Specifically, Chemed projects a shortfall of $18 million to $25 million for the 2025 fiscal year ending in September, a reversal from previous expectations of having a cushion. The company pointed to weaker-than-expected Medicare admissions in April and May as the primary cause. Adding to concerns, Chemed also noted unexpected weakness in the residential demand for its Roto-Rooter plumbing services during the second quarter.
Chemed is up 4.5% since the beginning of the year, but at $442.78 per share, it is still trading 28.5% below its 52-week high of $619.21 from April 2025. Investors who bought $1,000 worth of Chemed’s shares 5 years ago would now be looking at an investment worth $807.73.
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