Deutsche Bank AG has revised its price target on Aveanna Healthcare Inc. (NASDAQ:AVH) to $1.70 per share from its previous target of $3, while maintaining a Buy rating.
The financial services provider highlighted the company’s weakened financial performance and outlook in its report.
Deutsche Bank analysts remarked that Aveanna Healthcare’s second-quarter financial performance was adversely impacted by the coronavirus pandemic, resulting in a sharper-than-anticipated decline in its revenue. Moreover, the firm’s cash position was also adversely affected, and their balance sheet showed a cash deficit of $6.2 million as of June 30th.
The financial services provider further stated that Aveanna Healthcare’s management has implemented cost-reduction measures to stem the effects of the pandemic, but these measures have not been sufficient to offset the revenue shortfall.
The analysts also mentioned that Aveanna Healthcare’s third-quarter performance is likely to remain weak, due to the uncertain macroeconomic environment and the potential for further disruptions to its business.
Deutsche Bank analysts concluded that most of the downside risk to the company’s stock price has been factored in and that Aveanna Healthcare’s long-term prospects remain attractive.
Despite the revision in its price target, Deutsche Bank maintained its Buy rating on Aveanna Healthcare due to the firm’s potential for long-term growth, its cost-reduction initiatives, and its relatively attractive valuation.