JM Dutton & Associates continues its coverage of Arcadia Resources (OTCBB:ACDI), reiterating its Buy rating with a updated $1.40 price target. The 10-page report by JM Dutton senior analyst David Riedel is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Reuters, and other leading financial portals.
Arcadia Resources, Inc. (recent name change from Critical Home Care) has combined a range of businesses that make it an excellent play on the aging of the U.S. population and increased spending on healthcare. The Company is a significant player in two very attractive sections of the healthcare business: healthcare staffing (including homecare) and durable medical equipment (DME). A growing pharmacy business rounds out the offering.
The Company has made five very significant acquisitions and mergers this year and appears set to grow strongly in coming quarters. While near-term earnings projections are modest, we believe conditions at Arcadia will improve markedly in coming quarters and patient investors will be rewarded. The U.S. population is rapidly aging, with the total number of people over 65 expected to more than double from 35 million today to 79 million by the year 2030. Healthcare needs of this older population will support demand for the services that Arcadia provides. Management at Arcadia has long experience in its industries and, we believe, a solid understanding of how to grow its business. We are looking for EPS of $0.01 in the current fiscal year ending March 31, 2005 and $0.07 next fiscal year. Comparable companies trade at an average P/E of 26x. We are adjusting our target price from $1.60 to $1.40 (20x FY06 EPS), a level still over 60% above these shares current market price.
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Dutton & Associates is one of the largest independent investment research firms in the U.S. Its 27 senior analysts are primarily CFAs and have expertise in many industries. Dutton & Associates provides continuing analyst coverage of over 80 enrolled companies, and its research, estimates, and ratings are carried in all the major databases serving institutions and online investors.
The cost of enrollment in our one-year continuing research program is US $33,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. The Firm does not accept any equity compensation. We received $33,000 from the Company for 4 quarterly Research Reports with coverage commencing on 10/29/2004. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.