UPDATE: Barrington Research Initiates Coverage On Providence Service

Analysts at Barrington Research on Monday initiated coverage of The Providence Service Corporation PRSC 0.05% by issuing an Outperform rating on the stock and setting a price target of $49. Providence provides home and community-based social service transportation for children.

The Numbers

Barrington analyst Michael Petusky expects that the human services segment will see margin improvements in upcoming years, and Barrington is projecting strong top-line growth for Providence. Petusky explains in detail where the $49 target came from.

“We arrive at our price target by attaching an 8x multiple to our 2015 EBITDA estimate and a 7.3x multiple to our 2016 EBITDA expectation.”

Putting Skin In The Game

In late November, Providence CFO Robert Wilson purchased $276,450 of the company’s stock at a price of $36.86. Insider buying is not a perfectly reliable indication of future stock price, but it is reassuring to Providence shareholders to see that management is confident in the future.

Major Upside

Providence stock was…

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