What’s Next For Mednax Stock After The Recent 20% Rally?

[Updated: 7/2/2021] MD Stock Decline

The stock price of Mednax (NYSE: MD), a healthcare company that partners with hospitals, health systems, and health care facilities to offer specialized women and children clinical services, has seen a 5% drop over the last five trading days. Mednax’s contract with CVS Aetna in Texas expired earlier this week, and for renewal Mednax has reportedly asked for 22% higher reimbursement rates, while CVS Aetna offered a much lower rate, stating Mednax charges very high rates compared to other players.

If CVS Aetna fails to renew the contract with Mednax, it will have to spend out-of-network costs. Note that both the companies have been in a feud for quite some time now, as they previously took the matter to court over billing issues. Furthermore, last year, UnitedHealthcare cut ties with Mednax in four states citing high prices. ^[1]

Now that MD stock has fallen 5% in just five days, will it resume its downward trajectory over the coming weeks, or is a rise in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in the company’s historical stock price data, returns for MD stock average nearly 1.5% in the next one-month (21 trading days) period after experiencing a 5% drop over the previous week (five trading days). That said, in a scenario where the contract between Mednax and CVS Aetna is not renewed, it is likely that MD stock may see lower levels.

But how would these numbers change if you are interested in holding MD stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Mednax stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

Some Fun Scenarios, FAQs & Making Sense of Mednax Stock Movements:

Question 1: Is the average return for Mednax stock higher after a drop?

Answer: Consider two situations,

Case 1: Mednax stock drops by -5% or more in a week

Case 2: Mednax stock rises by 5% or more in a week

Is the average return for Mednax stock higher over the subsequent month after Case 1 or Case 2?

MD stock fares better after Case 2, with an average return of 1.5% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 1.6% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Mednax stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold Mednax stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For MD stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for Mednax after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although MD stock appears to be an exception to this general observation.

It’s pretty powerful to test the trend for yourself for Mednax stock by changing the inputs in the charts above.

[Updated: 5/17/2021] MD Stock Rise

The stock price of Mednax (NYSE: MD), a healthcare company that partners with hospitals, health systems, and health care facilities to offer women and children clinical services, has seen a solid 20% rise over the last ten trading days, and we believe the stock will likely continue to trend higher in the near term. The 20% rise can primarily be attributed to the company’s recently announced Q1 numbers, which were above the street estimates. Mednax’s Q1 revenue of $447 million was higher than the $424 million consensus estimate. Similarly, its adjusted EPS of $0.24 was much higher than the $0.13 consensus estimate. MD stock is also up 28% year-to-date.

While the company’s overall revenues in Q1 were negatively impacted by reductions in patient volumes due to the Covid-19 pandemic, the company saw an improvement compared to Q4 2020. Now that 46% of the U.S. population has received at least one dose of Covid-19 vaccine, the demand for physicians will rise gradually, boding well for Mednax’s business. The company also acquired two physician groups in the first quarter that will help boost its top-line going forward.

Looking at the recent rise, the 20% growth for MD stock over the last ten days compares with a 0.2% decline seen in the broader S&P 500 index. Now, is MD stock poised to rise further or is a decline after the recent rally imminent? We believe the MD stock will continue to rally in the near term, based on our machine learning analysis of trends in the stock price over the last few years.

MD stock is also up 17% in last five trading sessions. Although a rise of 17% in five trading days has been a rare event, given it has occurred only 23 times in last ten years. Out of those 23 instances, 18 of them resulted in MD stock rising over the subsequent one month period (21 trading days). This historical pattern reflects 18 out of 23, or about a 78% chance of gain in MD stock over the coming month. As a 17% change has occurred very few times historically, we can not draw a direct conclusion, just by using this historical pattern. That said, given the momentum in MD stock, a solid Q1 beat, and a strong expected growth in its business post Covid-19, we believe that the stock will continue to trend higher over the coming month. See our analysis on Mednax Stock Chances of Rise for more details.

Five Days: MD 17%, vs. S&P500 0.2%; Outperformed market

(1% likelihood event)

• Mednax stock rose 17% over a five-day trading period ending 5/14/2021, compared to broader market (S&P500) rise of 0.2%
• A change of 17% or more over five trading days is a 1% likelihood event, which has occurred 27 times out of 2516 in the last ten years

Ten Days: MD 20%, vs. S&P500 -0.2%; Outperformed market

(1% likelihood event)

• Mednax stock rose 20% over the last ten trading days (two weeks), compared to broader market (S&P500) decline of 0.2%
• A change of 20% or more over ten trading days is a 1% likelihood event, which has occurred 28 times out of 2511 in the last ten years

Twenty-One Days: MD 22%, vs. S&P500 0.8%; Outperformed market

(2% likelihood event)

• Mednax stock rose 22% the last twenty-one trading days (one month), compared to broader market (S&P500) rise of 0.8%
• A change of 22% or more over twenty-one trading days is a 2% likelihood event, which has occurred 50 times out of 2500 in the last ten years.

While MD stock may continue to rise, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how the stock valuation for United Therapeutics vs. eBay shows a disconnect with their relative operational growth. You can find many such discontinuous pairs here.

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