Chemed (CHE) Roto-Rooter unit faces mounting cost pressures that are clouding the value of the company's stronger VITAS hospice-care segment and could spur investor interest in separating the two businesses, RBC Capital Markets said Friday in a report.

Management's forecast for Roto-Rooter's revenue to rise 3% to 3.5% this year carries risk amid "recent underperformance and ongoing challenges" for the drain-cleaning business, RBC said. Paid-search costs and billing-collection issues may persist and continue to weigh on margins, the report said.

At the same time, RBC said it remains optimistic about VITAS's long-term earnings potential, citing strong traction in key Florida markets and recently awarded certificates of need.

RBC lowered its 2026 adjusted EPS estimate for Chemed to $23.60 from $25.47 and cut its revenue forecast to $2.67 billion from $2.7 billon.

RBC downgraded its rating on Chemed stock to sector perform from outperform and cut its price target to $422 from $572.

Price: 408.45, Change: +11.82, Percent Change: +2.98