On Aug 22, 2014, Zacks Investment Research downgraded AmSurg Corp. ( AMSG) to a Zacks Rank #5 (Strong Sell) from a Zacks Rank #3 (Hold). AmSurg has delivered negative earnings surprises in 2 of the last 4 quarters with an average miss of 0.50%.
Reasons for the Downgrade
AmSurg reported its second-quarter results on July 31, 2014. Despite the company registering year-over-year improvement in the quarter, both its top and bottom line missed the Zacks Consensus Estimate.
Adjusted earnings per share ( EPS) from continuing operations came in at of 63 cents, missing the Zacks Consensus Estimate by a penny. This earnings result also failed to exceed the EPS guidance range provided by the company.
S ales grossed $281.1 million improving 5.2% year over year but missed the Zacks Consensus Estimate of $283.0 million. Moreover, AmSurg exited the reported quarter with cash and cash equivalents of $44.9 million, down 11.6% from $50.8 million at the end of 2013. Besides, headwinds like reduction in workers' compensation reimbursement, sequestration and increased interest expense are intimidating.
Following a disappointing second-quarter, AmSurg has witnessed downward estimate revisions. For the current quarter, out of 4 analysts, 3 have lowered estimate revisions, while for the current year, out of 4 analysts, 2 have lowered estimates.
The Zacks Consensus Estimate for earnings in 2014 and 2015 has also showed a downward trend. The consensus for 2014 has declined 10.3% from $2.53 a month ago to $2.27, while the same for 2015 has dropped 11.1% from $3.16 a month earlier to $2.81.
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