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Pediatrix Medical Up 45.8% in 3 Months: Is it Too Late to Jump In?
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Pediatric service provider Pediatrix Medical Group, Inc. (MD - Free Report) continues its recovery on the back of improving operating results and rising commercial birth share in Florida. The company has seen its shares rise 45.8% in the past three months, recovering from the declines witnessed around the middle of this year, outpacing the industry’s 3.7% growth. The company also outperformed the S&P 500’s return of 2.4% during the past three months.
Given the impressive performance so far, can investors still consider buying Pediatrix Medical stock, or should you book profits? Currently trading at $10.93, MD remains below its 52-week high of $13.01, suggesting potential for further growth. The stock is trading above its 50-day and 200-day moving averages, indicating solid upward momentum.
MD’s Three-Month Price Performance
Image Source: Zacks Investment Research
Reasons to Like MD
The rising share of commercial births in Florida is a crucial tailwind for the company. It is expected to support its margin growth. It is exiting its affiliated office-based practices, apart from maternal-fetal medicine, to focus on core hospital-based services. This is expected to contribute to its EBITDA improvement strategy.
Management continues to forecast adjusted EBITDA between $200 million and $220 million for 2024, the mid-point signaling a 4.8% improvement from the 2023 reported figure. Our model estimate for Adjusted EBITDA is pegged at $209.6 million.
It also has an active inorganic growth profile targeted at expanding its national network of physician practices across women’s and children’s services. It acquired a maternal-fetal medicine practice in the first quarter of this year for a total of $9.7 million.
Stable same-facility patient volume growth witnessed so far this year is likely to continue, supporting its top line. Moreover, its hospital contract administrative fees are on the rise, with a 5.4% increase in the first half of the year.
Despite the recent growth in stock price, Pediatrix Medical is trading at a discount compared to the industry average. It presents a compelling investment opportunity with its attractive forward 12-month price-to-earnings ratio of 8.13X, lower than the industry average of 15.91X. The company has a Value Score of A.
Estimates for MD & Surprise History
The Zacks Consensus Estimate for 2024 adjusted earnings for Pediatrix Medical is currently pegged at $1.27 per share, indicating 0.8% year-over-year growth. The consensus mark for next year suggests a further 8.7% jump. It met earnings estimates in two of the past four quarters, met once and missed on the other occasion. This is depicted in the figure below.
Pediatrix Medical Group, Inc. Price and EPS Surprise
The consensus estimate for 2024 and 2025 revenues are pegged at $2.01 billion and $2.03 billion, respectively.
Key Concerns for MD
There are a few factors that investors should keep an eye on.
The company has struggled with free cash flow (FCF) over the past five years, recording declines in three of those years. Last year, FCF dropped by 24.2%, reaching $104 million. In the first half of 2024, the situation worsened, with FCF turning negative at $31 million.
Its trailing 12-month return on invested capital (ROIC) stands at 7%, lagging behind the industry average of 8.16%. This indicates that the company is less efficient at generating returns from its invested capital compared to its peers, signaling weaker capital utilization.
Final Verdict: Hold MD Stock Now
While Pediatrix Medical has strong long-term potential with the growing focus on maternal-fetal medicine practice and stable patient volume growth, the specific challenges facing the company cannot be ignored. MD remains one of the best-positioned pediatric service providerswith a favorable valuation to achieve margin improvement.
Overall, the outlook is largely neutral for MD shares. It currently carries a Zacks Rank #3 (Hold).
Better-Ranked Players
Investors can look at some better-ranked stocks in the broader Medical space, like Universal Health Services, Inc. (UHS - Free Report) , Tenet Healthcare Corporation (THC - Free Report) and CareDx, Inc. (CDNA - Free Report) . While Universal Health and Tenet Healthcare currently sport a Zacks Rank #1 (Strong Buy) each, CareDx carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Universal Health Services’ 2024 bottom line suggests 51% year-over-year growth. UHS witnessed seven upward estimate revisions over the past 60 days against no movement in the opposite direction. It beat earnings estimates in each of the last four quarters, with the average surprise being 14.6%.
The Zacks Consensus Estimate for Tenet Healthcare’s 2024 bottom line is pegged at $10.72 per share, which indicates 53.6% growth from a year ago. During the past 60 days, THC witnessed seven upward estimate revisions against none in the opposite direction. It beat earnings estimates in each of the last four quarters, with the average surprise being 58.5%.
The Zacks Consensus Estimate for CareDx’s current-year earnings implies a 140.6% improvement from the year-ago reported figure. CDNA beat earnings estimates in each of the last four quarters, with an average surprise of 114.6%. The consensus mark for its current-year revenues is pegged at $324.5 million, which indicates a 15.7% year-over-year increase.
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Pediatrix Medical Up 45.8% in 3 Months: Is it Too Late to Jump In?
Pediatric service provider Pediatrix Medical Group, Inc. (MD - Free Report) continues its recovery on the back of improving operating results and rising commercial birth share in Florida. The company has seen its shares rise 45.8% in the past three months, recovering from the declines witnessed around the middle of this year, outpacing the industry’s 3.7% growth. The company also outperformed the S&P 500’s return of 2.4% during the past three months.
Given the impressive performance so far, can investors still consider buying Pediatrix Medical stock, or should you book profits? Currently trading at $10.93, MD remains below its 52-week high of $13.01, suggesting potential for further growth. The stock is trading above its 50-day and 200-day moving averages, indicating solid upward momentum.
MD’s Three-Month Price Performance
Reasons to Like MD
The rising share of commercial births in Florida is a crucial tailwind for the company. It is expected to support its margin growth. It is exiting its affiliated office-based practices, apart from maternal-fetal medicine, to focus on core hospital-based services. This is expected to contribute to its EBITDA improvement strategy.
Management continues to forecast adjusted EBITDA between $200 million and $220 million for 2024, the mid-point signaling a 4.8% improvement from the 2023 reported figure. Our model estimate for Adjusted EBITDA is pegged at $209.6 million.
It also has an active inorganic growth profile targeted at expanding its national network of physician practices across women’s and children’s services. It acquired a maternal-fetal medicine practice in the first quarter of this year for a total of $9.7 million.
Stable same-facility patient volume growth witnessed so far this year is likely to continue, supporting its top line. Moreover, its hospital contract administrative fees are on the rise, with a 5.4% increase in the first half of the year.
Despite the recent growth in stock price, Pediatrix Medical is trading at a discount compared to the industry average. It presents a compelling investment opportunity with its attractive forward 12-month price-to-earnings ratio of 8.13X, lower than the industry average of 15.91X. The company has a Value Score of A.
Estimates for MD & Surprise History
The Zacks Consensus Estimate for 2024 adjusted earnings for Pediatrix Medical is currently pegged at $1.27 per share, indicating 0.8% year-over-year growth. The consensus mark for next year suggests a further 8.7% jump. It met earnings estimates in two of the past four quarters, met once and missed on the other occasion. This is depicted in the figure below.
Pediatrix Medical Group, Inc. Price and EPS Surprise
Pediatrix Medical Group, Inc. price-eps-surprise | Pediatrix Medical Group, Inc. Quote
The consensus estimate for 2024 and 2025 revenues are pegged at $2.01 billion and $2.03 billion, respectively.
Key Concerns for MD
There are a few factors that investors should keep an eye on.
The company has struggled with free cash flow (FCF) over the past five years, recording declines in three of those years. Last year, FCF dropped by 24.2%, reaching $104 million. In the first half of 2024, the situation worsened, with FCF turning negative at $31 million.
Its trailing 12-month return on invested capital (ROIC) stands at 7%, lagging behind the industry average of 8.16%. This indicates that the company is less efficient at generating returns from its invested capital compared to its peers, signaling weaker capital utilization.
Final Verdict: Hold MD Stock Now
While Pediatrix Medical has strong long-term potential with the growing focus on maternal-fetal medicine practice and stable patient volume growth, the specific challenges facing the company cannot be ignored. MD remains one of the best-positioned pediatric service providerswith a favorable valuation to achieve margin improvement.
Overall, the outlook is largely neutral for MD shares. It currently carries a Zacks Rank #3 (Hold).
Better-Ranked Players
Investors can look at some better-ranked stocks in the broader Medical space, like Universal Health Services, Inc. (UHS - Free Report) , Tenet Healthcare Corporation (THC - Free Report) and CareDx, Inc. (CDNA - Free Report) . While Universal Health and Tenet Healthcare currently sport a Zacks Rank #1 (Strong Buy) each, CareDx carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Universal Health Services’ 2024 bottom line suggests 51% year-over-year growth. UHS witnessed seven upward estimate revisions over the past 60 days against no movement in the opposite direction. It beat earnings estimates in each of the last four quarters, with the average surprise being 14.6%.
The Zacks Consensus Estimate for Tenet Healthcare’s 2024 bottom line is pegged at $10.72 per share, which indicates 53.6% growth from a year ago. During the past 60 days, THC witnessed seven upward estimate revisions against none in the opposite direction. It beat earnings estimates in each of the last four quarters, with the average surprise being 58.5%.
The Zacks Consensus Estimate for CareDx’s current-year earnings implies a 140.6% improvement from the year-ago reported figure. CDNA beat earnings estimates in each of the last four quarters, with an average surprise of 114.6%. The consensus mark for its current-year revenues is pegged at $324.5 million, which indicates a 15.7% year-over-year increase.