CIBC World initiated investment coverage of Odyssey HealthCare (ODSY), which provides hospice care to the terminally ill, with a strong buy rating. The firm also set a $25 price target on Odyssey shares.
Analyst Charles Lynch told Standard & Poor's MarketScope that Odyssey is the second-largest provider of hospice service in the U.S.; the company has grown rapidly since its formation in 1995, expanding its revenue base from $1 million in 1996 to an estimated $128 million in 2001and $164 million in 2002. Lynch notes the hospice industry is a relatively small part of the broader healthcare services industry; he sees expenditures for end-of-life services at about $4.2 billion this year. Lynch expects industry expansion to continue, driven by the aging of the U.S. population, increased recognition of the availability of end-of-life service, and other factors. He sees Odyssey posting EPS of $0.78 in 2001, rising to $0.95 in 2002.