NEW YORK (AP) -- Shares of Mednax Inc. declined Wednesday after a Deutsche Bank analyst downgraded the stock, saying government programs that are intended to reduce premature births will hurt Mednax's neonatal business.
THE SPARK: Analyst Darren Lehrich downgraded the stock to "Sell" from "Hold" and cut his price target to $58 from $73. He said government and industry programs are working hard to reduce preterm births, and evidence shows those initiatives are starting to affect the use of neonatal intensive care units. Lehrich said about 60 percent of Mednax's revenue comes from neonatal intensive care units, and the programs will hurt its profits.
"With more focus, measurement and resources being applied in this area, we expect a more powerful shift in neonatal ICU utilization over the next 12 to 24 months."
THE BIG PICTURE: Mednax is a national physician group that specializes in neonatal, maternal-fetal, pediatric cardiology and anesthesia doctor services. Lehrich said he now thinks Mednax will earn $4.85 per share in 2013, down from his previous estimate of $5.36 per share.
Analysts are forecasting income of $5.19 per share, according to FactSet.
The Fort Lauderdale, Fla., company is scheduled to report its second-quarter results the morning of July 31. FactSet says analysts expect Mednax to report income of $1.19 per share and revenue of $437.1 million.
SHARE ACTION: Mednax stock lost $3.13, or 4.7 percent, to $63.61 on Wednesday. The shares are down 8.3 percent since June 28. They jumped 5.1 percent that day after the Supreme Court upheld the March 2010 health care overhaul law.