SVB Leerink cuts American Renal to MP from OP; PT to $14 from $22

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SVB Leerink downgraded American Renal Associates (NYSE:ARA) to “market perform” from “outperform” and lowered its price target to $14 from $22 after the company delayed filing its 10-K and reporting fourth quarter earnings and 2019 guidance. The stock closed at $10.46 on March 8.

In addition, analyst Ana Gupte writes that a “new proposal from the Centers for Medicare & Medicaid Services on home dialysis and possible legislative rate risk in states even outside of California, materially reduces our conviction on the name. We see secular headwinds and company specific headwinds as likely to persist, while our margin expansion thesis seems challenged.”

Ms. Gupte said the company also announced that it could restate 2014-to-2018 earnings after a SEC review led American Renal's audit committee to re-examine the company’s revenue recognition and reserve related to revenues and accounts receivables.

Stephen Kilmer