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Mednax: Investment Thesis Intact, Discount Is Gone

Full-year earnings for Mednax (NYSE:MD) pretty much came in exactly as I had expected, and I am raising my fair value estimate for the stock to account for the time value of money. I reiterate my view that the company retains significant competitive advantages from network effect and strong intangible assets, and envision these trends strengthening as anesthesia practices further consolidate. With physicians increasingly turning towards Accountable Care Organizations to increase their bargaining clout, industry consolidation ought to proceed apace. That said, finding enough earnings-accretive acquisitions will become more difficult as the company expands and I expect growth to eventually begin to slow, so a touch of caution seems warranted. Wall Street appears to have caught on to the company's prospects, though, and with shares having jumped on the earnings news, whatever discount that been present before appears to have largely…