BofA Securities downgraded Acadia Healthcare (NASDAQ:ACHC) from Buy to Neutral on Wednesday, while lowering its price target to $25.00 from $27.00.
The downgrade reflects BofA’s assessment of higher headwinds from upcoming cuts to Medicaid state directed payment programs (SDPs) than previously estimated. These cuts are expected to begin in 2028 and beyond.
BofA applied a multiple of 6.2x 2026E EBITDA versus 6.4x previously, noting this valuation sits below Acadia’s historical average of 13x due to volume growth below historical levels, legal headline concerns, and the anticipated Medicaid cuts.
The firm expects Acadia to experience a volume rebound in the medium term as new facilities ramp up operations, before the Medicaid cuts take effect.
The new price target represents a reduction of approximately 7.4% from the previous target of $27.00 set by BofA Securities.
In other recent news, Acadia Healthcare’s second-quarter 2025 results have prompted several investment firms to adjust their outlooks on the company. Mizuho lowered its price target for Acadia Healthcare to $22, citing execution issues after the company’s earnings fell short of consensus estimates, excluding direct provider payments. Raymond James downgraded Acadia Healthcare from Strong Buy to Outperform and reduced its price target to $26, highlighting concerns about the company’s future cash flow. RBC Capital also revised its price target downward to $28, maintaining an Outperform rating while updating its financial model following the company’s recent earnings report.
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