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MEDNAX Plunges More Than 54% YTD: Will the Stock Rebound?
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MEDNAX Inc.’s (MD - Free Report) stock has plunged so far this year due to the widespread volatility induced by COVID-19, which compelled the company to withdraw its earnings guidance.
This Zacks Rank #3 (Hold) company has lost 54.9% year to date, wider than its industry's decline of 31.8%. The performance looks paler than the price movement of other companies in the same space, such as HCA Healthcare, Inc. (HCA - Free Report) , Universal Health Services, Inc. (UHS - Free Report) and Community Health Systems, Inc. (CYH - Free Report) , which have lost 29.9%, 29.8% and gained 12.1%, respectively, in the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The COVID-19 spread required hospitals to keep their elective procedures on hold to accommodate any potential surge in the COVID-19 cases. Cancellation of elective surgeries will therefore hurt the company’s revenues.
MEDNAX withdrew its initial guidance because of lower patient volumes. Further, on closure of operating suites and facilities per federal advisories to cancel non-urgent procedures and prohibition of the same by certain states, the company’s American Anesthesiology medical group took a massive hit. Decline in elective surgeries also reduced anesthesia services provided by MEDNAX-affiliated clinicians.
Moreover, within its Radiology Solutions, orders for radiological studies witnessed a downfall. Additionally, the company’s office-based practises, such as maternal-fetal medicine, pediatric cardiology and numerous pediatric subspecialties saw appointment cancellations from historical normal levels.
However, the company is taking several initiatives to tackle the ongoing crisis. Some are in favour of supporting clinician shortage by allowing anesthesiologists, anesthesia clinicians and pediatric clinicians manage emergency situations as well as addressing the dearth of Personal Protective Equipment (PPE) by collaborating with vendors, extending teleheath services, etc.
Will the Stock Bounce Back?
Against all odds, it should be noted that the company’s solid fundamentals will help it turn around once the overall economic condition improves. The company believes that contractions in patient volume are a blip due to the global pandemic. MEDNAX expects most deferrals to cause a backlog of demand going forward, given the nature of services it provides. Its balance sheet strength with moderate leverage and meaningful liquidity plus no-debt maturities until late 2023 impresses.
The stock carries an attractive VGM Score of A as well. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
MEDNAX Plunges More Than 54% YTD: Will the Stock Rebound?
MEDNAX Inc.’s (MD - Free Report) stock has plunged so far this year due to the widespread volatility induced by COVID-19, which compelled the company to withdraw its earnings guidance.
This Zacks Rank #3 (Hold) company has lost 54.9% year to date, wider than its industry's decline of 31.8%. The performance looks paler than the price movement of other companies in the same space, such as HCA Healthcare, Inc. (HCA - Free Report) , Universal Health Services, Inc. (UHS - Free Report) and Community Health Systems, Inc. (CYH - Free Report) , which have lost 29.9%, 29.8% and gained 12.1%, respectively, in the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The COVID-19 spread required hospitals to keep their elective procedures on hold to accommodate any potential surge in the COVID-19 cases. Cancellation of elective surgeries will therefore hurt the company’s revenues.
MEDNAX withdrew its initial guidance because of lower patient volumes. Further, on closure of operating suites and facilities per federal advisories to cancel non-urgent procedures and prohibition of the same by certain states, the company’s American Anesthesiology medical group took a massive hit. Decline in elective surgeries also reduced anesthesia services provided by MEDNAX-affiliated clinicians.
Moreover, within its Radiology Solutions, orders for radiological studies witnessed a downfall. Additionally, the company’s office-based practises, such as maternal-fetal medicine, pediatric cardiology and numerous pediatric subspecialties saw appointment cancellations from historical normal levels.
However, the company is taking several initiatives to tackle the ongoing crisis. Some are in favour of supporting clinician shortage by allowing anesthesiologists, anesthesia clinicians and pediatric clinicians manage emergency situations as well as addressing the dearth of Personal Protective Equipment (PPE) by collaborating with vendors, extending teleheath services, etc.
Will the Stock Bounce Back?
Against all odds, it should be noted that the company’s solid fundamentals will help it turn around once the overall economic condition improves.
The company believes that contractions in patient volume are a blip due to the global pandemic. MEDNAX expects most deferrals to cause a backlog of demand going forward, given the nature of services it provides. Its balance sheet strength with moderate leverage and meaningful liquidity plus no-debt maturities until late 2023 impresses.
The stock carries an attractive VGM Score of A as well. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>