Shares of Pediatrix Medical Group, Inc. MD have soared 37.7% in the past six months, outperforming the industry and sector’s declines of 12.9% and 9.4%, respectively. The S&P 500 Index rose 4.6% in the same time frame. Favorable payer mix and positive patient volume trends should further lead to more price appreciation of this stock.

MD’s Six-Month Price Performance

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Given the impressive performance so far, can investors still consider buying Pediatrix Medical stock, or should you book profits? Currently trading at $14.64, MD remains below its 52-week high of $17.67, suggesting potential for further growth. The stock is trading above its 50-day and 200-day moving averages, indicating solid upward momentum.

Reasons to Like MD

The rising share of commercial births in Florida is a crucial tailwind for the company. It is expected to support its margin growth. It is exiting its affiliated office-based practices, apart from maternal-fetal medicine, to focus on core hospital-based services. This is expected to contribute to its EBITDA improvement strategy.

Management continues to forecast adjusted EBITDA between $215 million and $235 million for 2025, the mid-point signaling a 0.4% improvement from the 2024 reported figure. Our model estimate for adjusted EBITDA is pegged at $219.8 million.

It also has an active inorganic growth profile aimed at expanding its national network of physician practices in women’s and children’s services. It acquired a maternal-fetal medicine practice in the first quarter of 2024 for $9.7 million.  

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 4% increase in 2024.

Despite the recent growth in stock price, Pediatrix Medical is trading at a discount compared to the industry average. It presents a compelling investment opportunity with its attractive forward 12-month price-to-earnings ratio of 9.42, lower than the industry average of 15.72. The company has a Value Score of A.

Estimates for MD & Surprise History

The Zacks Consensus Estimate for 2025 adjusted earnings for Pediatrix Medical is currently pegged at $1.54 per share, indicating 2% year-over-year growth. The consensus mark for next year suggests a further 4.1% jump. It met earnings estimates in two of the past four quarters, met once and missed on the other occasion. This is depicted in the figure below.

The Zacks Consensus Estimate for 2024 and 2025 revenues is pegged at $1.9 billion and $1.91 billion, respectively.

Final Verdict: Buy MD Stock Now

Pediatrix Medical has strong long-term potential with a growing focus on maternal-fetal medicine practice. Stable patient volume growth and streamlining initiatives bode well for the company. 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.

Zacks Rank and Other Key Picks

Pediatrix Medical currently sports a Zacks Rank #1 (Strong Buy).

Investors can look at some other top-ranked stocks in the broader Medical space, like Doximity, Inc. DOCS, Universal Health Services, Inc. UHS and The Ensign Group, Inc. ENSG. While Doximity sports a Zacks Rank #1, Universal Health and Ensign carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Doximity’s 2025 bottom line suggests 37.9% year-over-year growth. DOCS witnessed 10 upward estimate revisions over the past 30 days against no movement in the opposite direction. It beat earnings estimates in each of the last four quarters, with the average surprise being 26%.

The Zacks Consensus Estimate for Universal Health’s 2025 bottom line is pegged at $17.92 per share, which indicates 7.9% growth from a year ago. During the past 60 days, UHS witnessed four upward estimate revisions against one in the opposite direction. It beat earnings estimates in three of the last four quarters, missing once, with the average surprise being 15.5%.

The Zacks Consensus Estimate for Ensign’s 2025 earnings implies a 13.5% improvement from the year-ago reported figure. ENSG beat earnings estimates in each of the last four quarters, with an average surprise of 1.5%. The consensus mark for its current-year revenues is pegged at $4.9 billion, which indicates a 14.3% year-over-year increase.

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This article originally published on Zacks Investment Research (zacks.com).

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