Mizuho raises Pediatrix Medical price target to $18, keeps neutral

On Friday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Pediatrix Medical (TASE:BLWV) Group (NYSE:MD) shares, increasing the price target to $18 from the previous $15. The firm has maintained a Neutral rating on the healthcare provider’s stock, which has shown remarkable momentum with a nearly 99% return over the past year. According to InvestingPro analysis, the stock appears undervalued at its current price of $16.28.

The revision follows Pediatrix’s robust performance in the fourth quarter of 2024, where the company reported an adjusted EBITDA of $65.2 million, surpassing the consensus estimates by 26%. This significant beat was attributed to a favorable payer mix and same-store revenue growth. The company’s last twelve months EBITDA stands at $217.5 million, with InvestingPro data showing strong financial health metrics and a compelling free cash flow yield.

In light of the strong quarterly results, Mizuho has updated its adjusted EBITDA estimates for the years 2025 to 2027. The firm has introduced its 2027 expectations for the first time. Pediatrix’s initial guidance for 2025 suggests a modest year-over-year growth in adjusted EBITDA at the midpoint of approximately 0.5%, which is about 1% higher than the consensus estimates.

Mizuho’s analyst believes that the guidance provided by Pediatrix for 2025 is within reach and indicates that there might be potential for further upside. Despite the positive outlook on the company’s ability to achieve its guidance, Mizuho has decided to maintain a neutral stance on Pediatrix Medical Group’s stock at this time.

In other recent news, Pediatrix Medical Group Inc. reported robust financial results for the fourth quarter of 2024, exceeding earnings expectations. The company achieved an earnings per share (EPS) of $0.51, surpassing the forecasted $0.37, and reported revenues of $502 million, outpacing the anticipated $487.06 million. The company’s adjusted EBITDA for the quarter was $69 million, significantly higher than expectations. Pediatrix Medical also provided preliminary guidance for 2025, projecting adjusted EBITDA between $215 million and $235 million, with full-year revenue expected to be approximately $1.8 billion. The company noted strong same-unit revenue growth of 8.7%, contributing to its positive performance. Despite a challenging healthcare environment, Pediatrix Medical managed to reduce its net debt to $386 million and maintain cash reserves of $230 million. Analysts from UBS and Jefferies highlighted the company’s strategic focus on strengthening hospital relationships and clinician recruitment as key priorities for future growth. Additionally, the company completed a portfolio restructuring, which is expected to provide a $30 million EBITDA benefit annually.

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