On Friday, ModivCare Inc. (NASDAQ:MODV) experienced a shift in its stock outlook as Jefferies downgraded the healthcare services provider from Buy to Hold. The firm also adjusted ModivCare's price target to $39.00, a notable decrease from the previous target of $60.00. The downgrade reflects concerns about the company's financial guidance for the fiscal year 2024 and its recent performance.
The analyst from Jefferies pointed to a 10% shortfall in ModivCare's EBITDA guidance compared to Street estimates, highlighting operational challenges, including the loss of contracts and customers. The analyst's statement underscored the skepticism investors might have regarding the company's ability to meet its financial targets for the upcoming year, especially given the low EBITDA guidance provided for the first quarter.
ModivCare's recent financial results have also contributed to the cautious stance from Jefferies. The company reported a cash burn of $37M in the fourth quarter, raising concerns about its balance sheet and overall financial health. The analyst described ModivCare as a "show-me" story, suggesting that the stock may trade sideways in the near term as investors look for tangible signs of improvement and stability.
The revision in ModivCare's stock rating and price target comes amid broader concerns about the company's ability to navigate operational headwinds. With the revised EBITDA guidance falling short of expectations and questions about the company's fiscal management, ModivCare will be under close scrutiny as it works to address these challenges and regain investor confidence.
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