The company, which operates VITAS Healthcare a hospice service and Roto-Rooter plumbing company said that it will add $100 million to its buyback program. The buyback, which represents almost an eighth of the company’s market value, will be funded with cash from operations, free cash flow and some credit. Timing of the repurchases will depend on market conditions.

After the Cincinnati-based company revealed first-quarter profit that only grew by 4% the shares sunk to a four-year low. The company said for the quarter ending March 31 it earned $16.8 million, or 70 cents a share, up from $16.2 million, or 63 cents a share, in the same period last year. This result missed the street’s expectation of 83 cents a share.

Analysts Michael Wiederhorn from Oppenheimer believes, “the company is best served by using its cash flow to repurchase its stock at these attractive levels. We note that while the company had a weak first quarter, FCF remained strong at $36 million.” He added that the stock repurchase could add as much as $0.30 cents to EPS. Oppenheimer has a buy rating and $45 price target for the stock.

Chemed Corp. recently announced it increased its stock buyback program by $100 million.

The company, which runs Roto-Rooter and a hospice care business, said it would finance the stock buybacks through cash and borrowings under a credit line.

The amount of the authorized buyback represents almost an eighth of the company's market value.

Oppenheimer & Co. analyst Michael Wiederhorn wrote in a client note he thinks the best way for the company to use its cash is to buy back stock at this price. Chemed's shares closed Monday down more than 50 percent in the past year.

Wiederhorn rates Chemed's stock "Outperform" with a $45 price target.

Deutsche Bank said it is upgrading Chemed (CHE) to Buy from Hold. Reported strong second quarter results and increased 2007 earnings guidance. Predict upside from current levels with modest risk from macro conditions given company's business mix. $71 price target.

Downgraded by Deutsche Securities from Buy to Hold

Chemed Corporation, through its subsidiaries, offers hospice care services. The company operates in two segments, VITAS and ROTO ROOTER.

SHORT this one!
Has had a big run and looks fully valued.
Much competition in plumbing
high P/E
hgih debt to capital
G. Gorgen Litty and the plumbers, busted...

medical growthyness

Upgraded by Deutsche Securities from Hold to Buy

recemended by zacks