Chemed (CHE) Stock Forecast & Price Target

Chemed Corp's positive outlook is primarily driven by strong demand growth in its VITAS hospice segment, which serves as the leading provider of hospice and palliative care services and has demonstrated substantial profitability through margin improvements. Although recent admission growth has faced challenges due to increased competition in the Florida market, the company anticipates a rebound in 2026 as it pivots strategy to address limitations imposed by Medicare caps. Furthermore, the Roto-Rooter segment's steady performance in plumbing and restoration services adds to the overall resilience of Chemed's business model, aligning with favorable long-term growth prospects in both segments.

Chemed Corp faces a negative outlook due to anticipated macroeconomic headwinds in 2026, which are expected to soften consumer demand for both its VITAS and Roto-Rooter segments, resulting in a projected FY26 EPS that is 10% below targets. Additionally, the Roto-Rooter segment has experienced a significant decline in adjusted EBITDA margin, decreasing by 520 basis points year-over-year to 21.8%, driven by escalating labor, insurance, and marketing costs amidst weak consumer demand, evidenced by a 7.2% decline in total leads year-over-year in Q2. Furthermore, the company's profitability projections for FY2025 through FY2027 have been revised downward, reflecting an overall misalignment with past guidance and introducing risks linked to Medicare Cap exposure, pricing vulnerabilities associated with government programs, and the discretionary nature of plumbing services during economic downturns.