CHE Should I Buy
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Chemed Corp (CHE) does not present a compelling buy opportunity for a beginner investor with a long-term horizon at this time. While the stock has potential upside based on analyst valuations, the recent financial performance, analyst downgrades, and lack of strong positive catalysts suggest waiting for clearer signs of recovery or value unlocking.
The MACD is positive and expanding, indicating a bullish momentum. RSI is neutral at 63.269, and moving averages are converging, showing no strong directional trend. The stock closed at $390.85, near the R1 resistance level of $393.994, but there is no clear breakout signal.
Analysts see potential value unlocking through a separation of the Roto-Rooter and Vitas businesses, with a price target range of $426-$588, representing up to 59% upside. Oppenheimer maintains an Outperform rating with a $500 price target.
Recent financial performance shows declining revenue (-0.10% YoY), net income (-15.02% YoY), and EPS (-8.96% YoY). Roto-Rooter continues to face margin headwinds, and multiple analysts have downgraded the stock due to disappointing Q4 results and a weak 2026 outlook. Hedge funds are also selling the stock, with a 158.47% increase in selling activity last quarter.
In Q4 2025, Chemed reported a YoY decline in revenue (-0.10%), net income (-15.02%), and EPS (-8.96%). Gross margin also dropped to 32.67%, down 4.22% YoY, indicating operational challenges.
Analyst sentiment is mixed but leaning negative. Oppenheimer maintains an Outperform rating with a $500 price target, citing long-term value creation potential. However, RBC, BofA, and Jefferies have downgraded the stock due to Roto-Rooter's persistent margin issues and disappointing Q4 results.
