- Genesis Healthcare (NYSE:GEN) is downgraded at Credit Suisse to underperform from neutral as the analysts note that the factors critical for the company’s recovery are uncertain and beyond the company’s control.
- The target price is unchanged at $0.57, a discount of ~20.8% to Friday’s close.
- The analysts highlight three factors important for the company’s recovery: occupancy rebound, government aid, and rent relief from REITs.
- Noting that Genesis requires a mid-80’s level of occupancy to breakeven in terms of cash flows, the analyst A.J. Rice and the team expect the occupancy to rebound slowly from 76.5% seen in October.
- Despite the ongoing vaccinations, the analysts predict an uncertain reversal to the pandemic-driven shift to homecare.
- With the company calling for further government funds to remain as a going concern, the analysts argue ‘there is no quick fix to the current situation,’ citing the recent retirement of the long-time CEO George V. Hager.