Chemed will gain more momentum as it re-establishes its strong earnings record, according to Jefferies. The investment bank upgraded the medical and plumbing services stock to buy from hold. It also raised its price target on shares to $620 from $520, suggesting roughly 22% upside from Monday’s close. The rating change came after Chemed reported third-quarter results that beat analyst expectations. Shares were up more than 2% in the premarket. “Investors historically viewed CHE as a defensive, safehaven ‘compounder’ that commanded a premium [valuation] as a result, and the stock was a core holding for numerous funds,” analyst Brian Tanquilut said Tuesday in a note to clients. “As the [company] emerges out of recent operating issues that impacted earnings visibility, stability, & growth, we believe CHE will regain its premium multiple, especially given our expectation for a Q4/FY26 beat vs guidance and as mgmt rebuilds an earnings stability track record.” CHE 1Y mountain CHE 1-year chart Chemed has risen about 16% over the past year, outperforming the overall market. However, it has lagged the S & P 500 healthcare sector, which is up 23% in that time. That’s in part due to Medicare hospice caps limiting its client base and income potential in 2025.Tanquilut noted that Chemed has “fully operationalized out of Medicare cap issues.” The analyst added that Chemed’s Roto-Rooter plumbing business is also showing signs of moving past prior challenges. “Roto is now seen stabilizing top line … & anniversarying the impact of increased marketing spend (albeit causing a margin reset that we believe is fully embedded in [long-term] expectations), we expect consolidated earnings to return to healthy, predictable growth that we believe will be rewarded with the stock’s return to a premium valuation,” Tanquilut wrote. Of the five analysts covering Chemed, three have a buy or strong buy rating on the stock and two have a hold on it, LSEG data shows.
