Aveanna Healthcare's (AVAH) post-earnings sell-off was "overdone" as the company's fundamentals remain strong despite investor concern over private duty nursing rate updates, RBC Capital Markets said in a note Friday.

The brokerage said the sell-off stemmed mainly from expectations for more moderate private duty nursing rate updates and a weaker Q4 PDN spread rate that could pressure 2026 margins, though analysts view this as reflecting Aveanna's success in securing rate increases rather than any indirect Medicaid funding pressure.

Despite concerns over tighter Medicaid budgets, Aveanna remains well positioned, with a growing preferred payer network expected to drive volume-led revenue growth, according to the note.

The brokerage also said management's 2026 guidance does not include the planned acquisition of Family First Homecare, which could contribute to earnings before interest, tax, depreciation, and amortization in 2026.

RBC maintained its sector perform rating on the stock, but lowered its price target to $9 from $11.

Shares of Aveanna Healthcare were up 3.1% in Monday trading.

Price: 6.73, Change: +0.21, Percent Change: +3.14