We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Should You Buy, Sell or Hold Pediatrix Medical Stock at a 9.28X P/E?
Read MoreHide Full Article
Pediatrix Medical Group, Inc. (MD - Free Report) is currently trading at a discount compared to the industry average. The stock is currently trading at 9.28X, forward 12-month earnings, which compares to 13.98X for the industry, indicating undervaluation. The company has a Value Score of A.
Image Source: Zacks Investment Research
In the past six months, MD stock has surged 80.9% against the industry’s 15.3% decline. The company’s price performance also outperformed its peers, such as Acadia Healthcare Company, Inc. (ACHC - Free Report) , Brookdale Senior Living Inc. (BKD - Free Report) , and The Ensign Group, Inc. (ENSG - Free Report) , which lost 43.6%, 24.9% and gained 9.4%, respectively, in the same time frame. The stock also outperformed the S&P 500’s 10.9% rise.
MD’s Six-Month Price Performance
Image Source: Zacks Investment Research
Now, let’s take a look at the stock’s growth drivers.
MD’s Growth Drivers
The rising share of commercial births in Florida is a crucial tailwind for the company. It is expected to support its margin growth. The company is exiting its affiliated office-based practices, apart from maternal-fetal medicine, to focus on core hospital-based services. The exits aim to enhance the company's adjusted EBITDA by approximately $30 million annually. While a portion of EBITDA improvement will be realized in 2024 itself, the remainder will be realized in 2025. It aims to complete the portfolio restructuring plan by the fourth quarter of 2024.
Management continues to forecast adjusted EBITDA between $205 million and $215 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 $209.1 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. The company is actively exploring M&A opportunities in core service lines to drive inorganic growth. It acquired a maternal-fetal medicine practice in the first quarter of this year for a total of $9.7 million. This specialty area is expected to remain strong moving in 2025 as well.
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 5.3% increase in the first nine months of 2024. The company has also completed its transition to a hybrid RCM structure, hence automation of processes will lead to improved efficiency in the future.
Estimates for MD & Surprise History
Reflecting the positive sentiment around Pediatrix Medical, the Zacks Consensus Estimate for earnings per share has seen upward revisions. The consensus estimate for 2024 adjusted earnings for MD is currently pegged at $1.35 per share, which indicates 7.1% year-over-year growth. The company beat earnings estimates in three of the past four quarters, matched once, with an average surprise of 9.9%. The consensus estimate for 2024 revenues suggests 0.1% year-over-year growth.
Pediatrix Medical Group, Inc. Price and EPS Surprise
Pediatrix Medical has strong long-term potential with a growing focus on maternal-fetal medicine practice and stable patient volume growth. MD’s $30 million in projected EBITDA improvements from portfolio restructuring position it for strong financial performance. MD is well-poised for continued growth with rising commercial births in key markets, a completed transition to a hybrid RCM structure, and active M&A activity. All these factors make MD a compelling buy opportunity for investors. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report predicting the 7 stocks that will soar highest in the coming month.
Image: Bigstock
Should You Buy, Sell or Hold Pediatrix Medical Stock at a 9.28X P/E?
Pediatrix Medical Group, Inc. (MD - Free Report) is currently trading at a discount compared to the industry average. The stock is currently trading at 9.28X, forward 12-month earnings, which compares to 13.98X for the industry, indicating undervaluation. The company has a Value Score of A.
Image Source: Zacks Investment Research
In the past six months, MD stock has surged 80.9% against the industry’s 15.3% decline. The company’s price performance also outperformed its peers, such as Acadia Healthcare Company, Inc. (ACHC - Free Report) , Brookdale Senior Living Inc. (BKD - Free Report) , and The Ensign Group, Inc. (ENSG - Free Report) , which lost 43.6%, 24.9% and gained 9.4%, respectively, in the same time frame. The stock also outperformed the S&P 500’s 10.9% rise.
MD’s Six-Month Price Performance
Image Source: Zacks Investment Research
Now, let’s take a look at the stock’s growth drivers.
MD’s Growth Drivers
The rising share of commercial births in Florida is a crucial tailwind for the company. It is expected to support its margin growth. The company is exiting its affiliated office-based practices, apart from maternal-fetal medicine, to focus on core hospital-based services. The exits aim to enhance the company's adjusted EBITDA by approximately $30 million annually. While a portion of EBITDA improvement will be realized in 2024 itself, the remainder will be realized in 2025. It aims to complete the portfolio restructuring plan by the fourth quarter of 2024.
Management continues to forecast adjusted EBITDA between $205 million and $215 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 $209.1 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. The company is actively exploring M&A opportunities in core service lines to drive inorganic growth. It acquired a maternal-fetal medicine practice in the first quarter of this year for a total of $9.7 million. This specialty area is expected to remain strong moving in 2025 as well.
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 5.3% increase in the first nine months of 2024. The company has also completed its transition to a hybrid RCM structure, hence automation of processes will lead to improved efficiency in the future.
Estimates for MD & Surprise History
Reflecting the positive sentiment around Pediatrix Medical, the Zacks Consensus Estimate for earnings per share has seen upward revisions. The consensus estimate for 2024 adjusted earnings for MD is currently pegged at $1.35 per share, which indicates 7.1% year-over-year growth. The company beat earnings estimates in three of the past four quarters, matched once, with an average surprise of 9.9%. The consensus estimate for 2024 revenues suggests 0.1% year-over-year growth.
Pediatrix Medical Group, Inc. Price and EPS Surprise
Pediatrix Medical Group, Inc. price-eps-surprise | Pediatrix Medical Group, Inc. Quote
Conclusion
Pediatrix Medical has strong long-term potential with a growing focus on maternal-fetal medicine practice and stable patient volume growth. MD’s $30 million in projected EBITDA improvements from portfolio restructuring position it for strong financial performance. MD is well-poised for continued growth with rising commercial births in key markets, a completed transition to a hybrid RCM structure, and active M&A activity. All these factors make MD a compelling buy opportunity for investors. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.