Pediatrix Medical Group (MD – Research Report), the Healthcare sector company, was revisited by a Wall Street analyst on November 2. Analyst Whit Mayo from Leerink Partners remains neutral on the stock and has a $10.00 price target.
Whit Mayo of Leerink Partners firm has given a Hold rating to Pediatrix Medical Group, basing his decision on a number of critical factors. Primarily, Mayo notes the company’s struggle with increasing operational costs that are outpacing revenue growth, thereby exerting pressure on profit margins and future valuation. This situation presents a risk to the company’s financial figures and its Return on Invested Capital (ROIC). Even if the company were to manage its costs down to their best levels, Mayo anticipates no more than $190 million in EBITDA for the coming year. He also points out that finding a long-term solution to market pressures on wages could be a significant challenge.
Mayo also highlights the company’s unit costs, which have seen a significant increase, and have led to meaningful margin compression. If this trend continues, it could further impact the company’s financials. Additionally, Mayo forecasts a 6% year-on-year decline in EBITDA in 2024, accompanied by the need for investments to support the company’s new revenue cycle strategy, which might introduce operational disruption risks. As a result, Mayo has lowered his EBITDA forecasts for the company for the years 2023 to 2025, and also reduced the price target from $14 to $10. He concludes by indicating more downside risk than upside for the company given the potential for a sustained negative revision cycle.
In another report released on November 3, Mizuho Securities also maintained a Hold rating on the stock with a $11.00 price target.
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Pediatrix Medical Group (MD) Company Description:
MEDNAX, Inc. provides physician services including newborn, anesthesia, maternal-fetal, tele radiology, pediatric cardiology and other pediatric subspecialty care. The company’s solution include anesthesiology & pain management, prenatal, neonatal, pediatric, radiology, tele radiology, revenue cycle management and perioperative improvement consulting. MEDNAX was founded by Roger J. Medel in 1979 and is headquartered in Sunrise, FL.
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