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Bear of the Day: Surgery Partners (SGRY)

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This market is nothing short of phenomenal. There have been unprecedented moves in stocks across multiple industries. More than just a post-COVID bounce back, this market is really showing what it is made of. It may seem, in a market this strong, that any name you pick will simply go straight up. But the reality of the situation is, there are some stocks out there that will be in real trouble when the euphoria dies down. I mean, stocks with weak earnings trends are going to be the ones that give up the most ground.

One way to avoid these potential pitfalls is to lean on the time-tested Zacks Rank. Stocks with low Zacks Ranks have the weakest earnings trends. These are stocks which could very well fail when investors become more cautious about where to put their money.

Zacks Rank #5 (Strong Sell) stocks have the weakest earnings trends. One such stock is today’s Bear of the Day, Surgery Partners (SGRY - Free Report) .

Surgery Partners owns and operates a network of surgical facilities and related services in the United States. The company operates through three segments: Surgical Facility Services, Ancillary Services, and Optical Services. The company's surgical hospitals also provide ancillary services, such as diagnostic imaging, pharmacy, laboratory, obstetrics, oncology, physical therapy, and wound care; and ancillary services, which consist of a diagnostic laboratory, multi-specialty physician practices, urgent care facilities, anesthesia services, and optical services. It also operates optical laboratory that manufactures eyewear. As of March 31, 2020, the company owned or operated a portfolio of 127 surgical facilities, including 111 ambulatory surgical centers and 16 surgical hospitals in 30 states. 

COVID-related shutdowns caused analysts to cut their earnings estimates for the stock. Over the last 60 days, analysts have cut estimates for both the current year and next year. The bearish sentiment has pushed down our Zacks Consensus Estimates for the current year from a 96-cent loss to a $1.23-loss while next year’s number is off from a 50-cent loss to a 68-cent loss.

The Medical Services industry is in the Bottom 35% of our Zacks Industry Rank. Investors looking for other stocks within the same industry should do some further due diligence on Zacks Rank #1 (Strong Buy) EUROFINS (ERFSF) or Zacks Rank #2 (Buy) Apollo Medical Holdings (AMEH).

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