Here’s Why Progyny (PGNY) Was Under Pressure in Q3

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Polen Capital, an investment management company, released its “Polen U.S. Small Company Growth Strategy” third-quarter 2024 investor letter. A copy of the letter can be downloaded here. The third quarter had a strong finish for U.S. small-cap equities, driven by interest rate reductions and fading recessionary concerns. In the third quarter, the fund delivered 7.65% gross, and 7.35% net of fees compared to an 8.41% return for the Russell 2000 Growth Index. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2024.

Polen U.S. Small Company Growth Strategy highlighted stocks like Progyny, Inc. (NASDAQ:PGNY), in the third quarter 2024 investor letter. Progyny, Inc. (NASDAQ:PGNY) is a benefits management company focuses on fertility and family building benefits solutions. The one-month return of Progyny, Inc. (NASDAQ:PGNY) was -15.78%, and its shares lost 58.39% of their value over the last 52 weeks. On November 15, 2024, Progyny, Inc. (NASDAQ:PGNY) stock closed at $13.77 per share with a market capitalization of $1.173 billion.

Polen U.S. Small Company Growth Strategy stated the following regarding Progyny, Inc. (NASDAQ:PGNY) in its Q3 2024 investor letter:

"The Portfolio's top detractors wereProgyny, Inc. (NASDAQ:PGNY), elf Beauty, and Alarm.com. It's been a tough year for Progyny, the leading managed care provider specializing in fertility. Earlier this year, the stock came under pressure due to fluctuations in benefits utilization trends, which are within a normal range for the company. In retrospect, we believe company management could have been more thoughtful about guidance for the year, given natural fluctuations in the business. Additionally, the utilization briefly came under pressure then normalized after the February 2024 Alabama Supreme Court ruling on IVF—which declared that embryos created through IVF should be considered children— and the subsequent media attention. This fueled uncertainty but does not appear to be the driver of weaker fundamentals. The company lowered guidance again and later reported the loss of a very large customer, Amazon. While much is unchanged about the massive long-term opportunity in fertility benefits, we have placed Progyny under review, as our process dictates."

A close up of a hand, fingers wrapped around a fertility specialist syringe.

Progyny, Inc. (NASDAQ:PGNY) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held Progyny, Inc. (NASDAQ:PGNY) at the end of the second quarter which was 26 in the previous quarter. The third quarter revenue of Progyny, Inc. (NASDAQ:PGNY) grew 2% year-over-year to $286.6 million. While we acknowledge the potential of Progyny, Inc. (NASDAQ:PGNY) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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