Deutsche Bank Gives Update On Chemed Corp.; Raises PT

Deutsche Bank updates it's 2011 model and introducing 2012 estimates on Chemed Corp CHE. While DB maintains a Hold, it is becoming more optimistic about CHE's capital deployment strategy given recent buyback activity. Deutsche Bank raises its price target to $67 from $61 to base off of a new out-year forecast -- 7.5x 2012 EV/EBITDA, although DB acknowledges a sum-of-the-parts could support a higher valuation multiple. Our Hold opinion is under-pinned by CHE's relatively modest growth profile and more mature margin structure, offset by strong FCF and flexible balance sheet. Deutsche Bank's 2011 estimates include Y/Y rev growth of +5.4% to $1.34B, EBITDA growth of +9.8% to $190.4M, and pro forma EPS of $4.68. Deutsche Bank's EPS forecast is above consensus due primarily to its share buyback assumption in which it assumes CHE will repurchase roughly 4% of shares outstanding in 2011. Deutsche Bank has a $67 PT and Hold rating on CHE CHE closed Friday at $63.33