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Wednesday, December 29, 2010

Chemed (NYSE:CHE) Authorizes Stock Repurchase of $70 Million

With the announcement by Chemed (NYSE:CHE) that they're going to increase their stock repurchase plan by another $70 million, Deutsche Bank (NYSE:DB) sees numbers for 2011 moving up incrementally for the company.

Deutsche said, "CHE authorized an additional $70M for stock repurchase which will be funded through a combination of cash and debt. As of September 30, 2010 the company had $45.4M outstanding under the current plan. Assuming the total $115.5 allotment is utilized this could result in an additional 3-5% accretion to our 2011 estimates or $2-3 to our price target. Our model assumes 975k share are repurchased in 2011. The additional allotment leaves an additional 664k (2.9% of existing shares) available for repurchase assuming a 10% premium to the existing share price. Recall in our Q3 earnings note, we sensed that CHE's capital deployment strategy could become more aggressive with buyback and it would seem that the company is moving in this direction."

Deutsche Bank maintains a "Hold" rating on Chemed, which closed Tuesday at $64.66, up $0.62, or 0.97 percent.

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