Chemed (CHE) Stock Forecast & Price Target

Chemed Corp's stock outlook is bolstered by strong demand growth in both its VITAS and Roto-Rooter segments, indicating a resilient performance despite challenges such as the Florida Medicare cap limitation. The VITAS segment, the leading hospice provider in the nation, is poised for a rebound in 2026, supported by a strategic focus on lower-profit short-stay admissions that will eliminate the Florida cap. Moreover, VITAS has demonstrated successful profitability improvements alongside stable growth, underlining the segment's robust long-term growth prospects and favorable reimbursement outlooks, which contribute to a positive financial forecast for the company.

Chemed Corp faces significant challenges, including anticipated macroeconomic headwinds that may lead to decreased consumer demand for both its VITAS and Roto-Rooter segments, resulting in an estimated fiscal year 2026 EPS that is projected to be 10% below prior targets. The Roto-Rooter segment has experienced a concerning decline in adjusted EBITDA margin, down 520 basis points year-over-year to 21.8%, attributed to rising labor, insurance, and marketing costs, coupled with a 7.2% drop in total leads year-over-year. Additionally, the company has adjusted its EPS estimates downward for fiscal years 2025, 2026, and 2027, indicating alignment issues with prior guidance and reflecting ongoing financial pressures, particularly related to exposure to governmental pricing risks and economic sensitivity in discretionary plumbing services.