Surgery Partners (SGRY) is back in focus after a sharp guidance cut, which has sparked a legal probe and fresh analyst downgrades. The stock has slid over 25%, raising new questions about its growth playbook.

The guidance cut and subsequent legal probe come after a busy stretch, including a new Baylor Scott & White partnership and a $425 million senior notes offering. However, the 1 year total shareholder return of minus 25.4 percent and 3 year total shareholder return of minus 40.6 percent signal that momentum has clearly been fading rather than building.

Given that kind of volatility, it can help to compare against steadier names in the same space. This might be a good moment to explore healthcare stocks for other healthcare ideas.

With shares now trading at a steep discount to both past highs and Wall Street targets, the key debate is whether guidance reset risks are fully digested or if investors are getting in before future growth is truly priced in.

Most Popular Narrative: 38.5% Undervalued

With Surgery Partners last closing at $15.83 versus an implied fair value of about $25.73, the most followed narrative sees a sizable valuation gap opening up.

Disciplined execution on M&A and portfolio optimization, including accretive acquisitions and potential asset sales or health system partnerships, should enhance margin expansion, accelerate deleveraging, and improve free cash flow conversion, supporting improvements in net margins and long term earnings power.

Want to see how steady revenue growth, rising margins, and a punchy future earnings multiple all combine into that higher fair value math? The full narrative lays out the projections, the timing, and the assumptions that need to click into place for this reset story to work.

Result: Fair Value of $25.73 (UNDERVALUED)

However, lingering pressure from rising interest costs and slower than hoped for acquisitions could still derail the deleveraging story and delay any valuation re-rating.

Build Your Own Surgery Partners Narrative

If you see the story differently or want to stress test the assumptions yourself, you can build a custom view in just minutes: Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Surgery Partners.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.