Medifast (MED) Up 6.5% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Medifast (MED). Shares have added about 6.5% in that time frame, outperforming the S&P 500.But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Medifast due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.Medifast's Q2 Earnings Beat EstimatesMedifast delivered second-quarter 2025 results, wherein both the top and bottom lines beat the Zacks Consensus Estimate. Both net sales and earnings experienced year-over-year declines.Medifast’s Quarterly Performance: Key InsightsMED reported quarterly earnings of 22 cents per share, reflecting a gain from its investment in LifeMD. Excluding this gain, the adjusted earnings were four cents per share comparing favorably with the Zacks Consensus Estimate of break-even earnings. The company reported earnings of 92 cents per share in the year-ago quarter.Net revenues of $105.6 million declined 37.4% year over year due to a drop in the number of active earning OPTAVIA coaches. However, the metric exceeded the Zacks Consensus Estimate of $95 million. The average revenue per active earning OPTAVIA Coach was $4,630, down 6.9% year over year from $4,972, mainly driven by pressure in client acquisition with challenges in the operating landscape, including rapid adoption of GLP-1 medications for weight loss.The number of active earning OPTAVIA Coaches has been going downward year over year since the first quarter of 2023, thanks to persistent challenges with client acquisition. The total number of active earning OPTAVIA coaches plunged 32.7% to 22,800 from 33,900 seen in the year-earlier quarter.MED’s Margin & Cost DetailsGross profit was $76.6 million, down 37.9% year over year on lower revenues. The gross margin was 72.6%, down 60 basis points (bps) year over year. We expected gross profit to be $83.7 million in the second quarter.Selling, general and administrative expenses (SG&A) fell 40.8% year over year to $77.7 million. This decrease was primarily caused by a $24.3 million reduction in OPTAVIA coach compensation due to lower volume and fewer active earning coaches. As a percentage of revenues, SG&A declined 430 bps year over year to 73.6% of revenues on roughly 740 bps for supply-chain optimization initiatives and 180 bps for cancellation of the OPTAVIA convention incurred in the year-earlier quarter. This was somewhat offset by 440 bps owing to the loss of leveraged fixed costs on reduced sales volumes.The loss from operations improved 86.5% to $1.1 million. As a percentage of revenues, loss from operations was 1% for the reported quarter compared with 4.7% in the year-ago period.Medifast’s Financial Health SnapshotMED concluded the quarter with cash, cash equivalents and investment securities of $162.7 million, no debt (as of June 30, 2025) and total shareholders’ equity of $216 million.Sneak Peek Into MED’s 2025 OutlookThe company expects third-quarter 2025 revenues between $70 million and $90 million, with the bottom line ranging from a loss of 60 cents to break-even.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in estimates review.The consensus estimate has shifted -116.67% due to these changes.VGM ScoresAt this time, Medifast has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Medifast has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.Performance of an Industry PlayerMedifast is part of the Zacks Food - Miscellaneous industry. Over the past month, Lamb Weston (LW), a stock from the same industry, has gained 6.4%. The company reported its results for the quarter ended May 2025 more than a month ago.Lamb Weston reported revenues of $1.68 billion in the last reported quarter, representing a year-over-year change of +4%. EPS of $0.87 for the same period compares with $0.78 a year ago.Lamb Weston is expected to post earnings of $0.54 per share for the current quarter, representing a year-over-year change of -26%. Over the last 30 days, the Zacks Consensus Estimate has changed -6.8%.The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Lamb Weston. Also, the stock has a VGM Score of A.Higher. Faster. Sooner. Buy These Stocks NowA small number of stocks are primed for a breakout, and you have a chance to get in before they take off.At any given time, there are only 220 Zacks Rank #1 Strong Buys. On average, this list more than doubles the S&P 500. We’ve combed through the latest Strong Buys and selected 7 compelling companies likely to jump sooner and climb higher than any other stock you could buy this month.You'll learn everything you need to know about these exciting trades in our brand-new Special Report, 7 Best Stocks for the Next 30 Days.Download the report free now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MEDIFAST INC (MED): Free Stock Analysis Report Lamb Weston (LW): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks