Pediatrix shares hit year low after company cuts 2Q outlook

Shares of Pediatrix Medical Group fell sharply Tuesday after the company announced it was cutting its second-quarter and full-year outlook on fewer neonatal intensive-care unit patients.

Shares of Fort Lauderdale, Fla.-based Pediatrix slid $5.15, or 9.3 percent, to $50.28. Earlier in the session, shares hit a new year low of $45.20. The stock had traded between $52.48 and $72.51 in the past 52 weeks.

The company said that through the first six weeks of the second quarter, same-unit neonatal unit volume declined 2 percent compared with the year-ago period.

Pediatrix now expects second-quarter earnings of between 77 and 80 cents per share. The company had previously projected 85 to 87 cents per share. It also said it expects to miss full-year profit estimates of between $3.35 and $3.45 per share.

Analysts surveyed by Thomson Financial expect second-quarter earnings of 84 cents per share.

Raymond James analyst John W. Ransom, who has a "Market Perform" rating on shares, said he was lowering his second-quarter profit estimate to 78 cents per share and his 2008 estimate to $3.20 per share. He added that he believes the stock price "does not yet reflect the likelihood that NICU volumes will remain weak in the short to intermediate term."

JPMorgan analyst Dawn R. Block, however, maintained her "Overweight" rating. She said she believes there is no correlation between neonatal unit admissions and the economy, noting that historically, birth rates can be volatile on a monthly and quarterly basis.