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Why Investors Are Retaining Pediatrix Medical (MD) Stock Now
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Pediatrix Medical Group, Inc. (MD - Free Report) is well-poised to grow on the back of its expanding footprint, telehealth services and seasonal re-acceleration in volumes. Its financial flexibility is a major positive.
Pediatrix Medical — with a market cap of $1.1 billion — provides different pediatric subspecialty care services. Courtesy of solid prospects, this currently Zacks Rank #3 (Hold) stock is worth retaining in your portfolio at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for MD’s 2023 earnings is pegged at $1.53 per share, which remained stable in the past 30 days. Pediatrix Medical beat on earnings in one of the last four quarters, met once and missed on the other occasions. This is depicted in the graph below.
Pediatrix Medical Group, Inc. Price and EPS Surprise
The consensus mark for current-year revenues stands at more than $2 billion, suggesting a 3% rise from the prior-year reported number. Our estimate indicates a significant increase in net patient service revenues, which is likely to support the top-line growth.
We expect the company’s Hospital Contract Administrative Fees to rise more than 5% year over year in 2023. Improving collections related to revenue cycle management activities is expected to benefit the company.
Pediatrix Medical’s active inorganic growth profile is attractive, which boosts its capacity, scales operations and penetrates different locations. Management remains optimistic about spending a modest capital amount on potential acquisition opportunities across its core service lines during the second half of 2023. The next year will likely see more capital committed to acquisitions.
Its cash generation abilities, which took a hit in the first quarter, came back on track in the second quarter. This has enabled it to repay $75 million in borrowings in the second quarter. Further, it plans to repay all the revolver borrowings in the third quarter, which will then enable it to build a cash position.
Its focus in key markets like Houston and Orlando is expected to position the company for long-term growth. It is also likely to open three de novo facilities in the Denver market in the second half of this year.
Key Risks
However, there are a few factors that investors should keep an eye on.
A sluggish birth rate is expected to hamper MD’s long-term growth potential. Also, its rising expenses on the back of higher practice salaries and benefits and supplies will constrain profit growth. We expect practice salaries and benefits to jump nearly 4% this year. Nevertheless, we believe that a systematic and strategic plan of action will drive MD’s growth in the long term.
The Zacks Consensus Estimate for Select Medical’s 2023 earnings indicates a 56.9% year-over-year increase to $1.93 per share. It has witnessed one upward estimate revision over the past month against no movement in the opposite direction. The consensus mark for SEM’s 2023 revenues indicates 4.2% growth from a year ago.
The Zacks Consensus Estimate for Tenet Healthcare’s 2023 bottom line is pegged at $5.73 per share, which rose 2.3% in the past 60 days. During this time, THC has witnessed four upward estimate revisions against none in the opposite direction. It beat earnings estimates in all the last four quarters, with the average surprise being 25.9%.
The Zacks Consensus Estimate for Atai Life Sciences’ current-year earnings implies a 16.3% improvement from the year-ago reported figure. It has witnessed four upward estimate revisions over the past 60 days against no movement in the opposite direction. ATAI beat earnings estimates in two of the last four quarters, met once and missed on one occasion.
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Why Investors Are Retaining Pediatrix Medical (MD) Stock Now
Pediatrix Medical Group, Inc. (MD - Free Report) is well-poised to grow on the back of its expanding footprint, telehealth services and seasonal re-acceleration in volumes. Its financial flexibility is a major positive.
Pediatrix Medical — with a market cap of $1.1 billion — provides different pediatric subspecialty care services. Courtesy of solid prospects, this currently Zacks Rank #3 (Hold) stock is worth retaining in your portfolio at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for MD’s 2023 earnings is pegged at $1.53 per share, which remained stable in the past 30 days. Pediatrix Medical beat on earnings in one of the last four quarters, met once and missed on the other occasions. This is depicted in the graph below.
Pediatrix Medical Group, Inc. Price and EPS Surprise
Pediatrix Medical Group, Inc. price-eps-surprise | Pediatrix Medical Group, Inc. Quote
The consensus mark for current-year revenues stands at more than $2 billion, suggesting a 3% rise from the prior-year reported number. Our estimate indicates a significant increase in net patient service revenues, which is likely to support the top-line growth.
We expect the company’s Hospital Contract Administrative Fees to rise more than 5% year over year in 2023. Improving collections related to revenue cycle management activities is expected to benefit the company.
Pediatrix Medical’s active inorganic growth profile is attractive, which boosts its capacity, scales operations and penetrates different locations. Management remains optimistic about spending a modest capital amount on potential acquisition opportunities across its core service lines during the second half of 2023. The next year will likely see more capital committed to acquisitions.
Its cash generation abilities, which took a hit in the first quarter, came back on track in the second quarter. This has enabled it to repay $75 million in borrowings in the second quarter. Further, it plans to repay all the revolver borrowings in the third quarter, which will then enable it to build a cash position.
Its focus in key markets like Houston and Orlando is expected to position the company for long-term growth. It is also likely to open three de novo facilities in the Denver market in the second half of this year.
Key Risks
However, there are a few factors that investors should keep an eye on.
A sluggish birth rate is expected to hamper MD’s long-term growth potential. Also, its rising expenses on the back of higher practice salaries and benefits and supplies will constrain profit growth. We expect practice salaries and benefits to jump nearly 4% this year. Nevertheless, we believe that a systematic and strategic plan of action will drive MD’s growth in the long term.
Key picks
Some better-ranked stocks in the broader Medical space are Select Medical Holdings Corporation (SEM - Free Report) , Tenet Healthcare Corporation (THC - Free Report) and Atai Life Sciences N.V. (ATAI - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Select Medical’s 2023 earnings indicates a 56.9% year-over-year increase to $1.93 per share. It has witnessed one upward estimate revision over the past month against no movement in the opposite direction. The consensus mark for SEM’s 2023 revenues indicates 4.2% growth from a year ago.
The Zacks Consensus Estimate for Tenet Healthcare’s 2023 bottom line is pegged at $5.73 per share, which rose 2.3% in the past 60 days. During this time, THC has witnessed four upward estimate revisions against none in the opposite direction. It beat earnings estimates in all the last four quarters, with the average surprise being 25.9%.
The Zacks Consensus Estimate for Atai Life Sciences’ current-year earnings implies a 16.3% improvement from the year-ago reported figure. It has witnessed four upward estimate revisions over the past 60 days against no movement in the opposite direction. ATAI beat earnings estimates in two of the last four quarters, met once and missed on one occasion.