Core Viewpoint - The article discusses the bullish outlook for small- and mid-cap stocks, highlighting their potential for earnings growth as the market approaches the end of the year, with expectations for a catch-up in performance compared to large-cap stocks driven by favorable market conditions and improved earnings guidance [2][3][4]. Small and Mid-Cap Stocks Outlook - Scott Chronert, Citi's U.S. equity strategist, emphasizes that small and mid-cap stocks are expected to transition from low single-digit earnings growth in 2025 to low double-digit growth in 2026 [3]. - The recent Q3 earnings reports from small-cap companies have shown raised guidance for Q4 and 2026, indicating a positive trend for these stocks [3]. - The small-cap sector is coming off a two-year period of low earnings, which sets a favorable comparison for future growth [3]. Methodology for Stock Selection - The list of the 10 hottest small-cap stocks was compiled using the Finviz Stock Screener, WSJ, Yahoo Finance, and Insider Monkey's Q2 2025 database, focusing on stocks with market capitalizations between $300 million and $2 billion that gained over 50% in the past six months [7]. - Stocks were ranked based on the number of hedge fund holders, indicating interest from institutional investors [7][8]. Featured Small-Cap Stocks - **Aveanna Healthcare Holdings Inc. (NASDAQ:AVAH)**: - Market Capitalization: $1.88 billion - 6-Month Performance: 55.36% - Revenue grew by 22.2% year-over-year to $621.9 million, exceeding analyst expectations [10][12]. - Adjusted EBITDA increased by 67.5% year-over-year to $80.1 million, with management raising full-year revenue guidance to over $2.375 billion [13][14]. - **Spyre Therapeutics, Inc. (NASDAQ:SYRE)**: - Market Capitalization: $1.81 billion - 6-Month Performance: 56.40% - Positive interim Phase 1 results for SPY003, a novel treatment for inflammatory bowel disease, were announced, showing a favorable safety profile [15][16]. - The company is well-positioned financially with a substantial cash runway to support operations until the second half of 2028 [18].

Company Overview - Apogee Therapeutics Inc. (APGE) is part of the Medical group, which consists of 951 companies and currently ranks 4 within the Zacks Sector Rank [2] - The company is classified under the Medical - Biomedical and Genetics industry, which includes 469 companies and is ranked 78 in the Zacks Industry Rank [6] Performance Metrics - Year-to-date, Apogee Therapeutics has returned approximately 25.3%, significantly outperforming the Medical sector's average return of 2.1% [4] - The Zacks Consensus Estimate for APGE's full-year earnings has increased by 0.2% over the past quarter, indicating improved analyst sentiment and a stronger earnings outlook [4] Comparison with Peers - Aveanna Healthcare (AVAH), another stock in the Medical sector, has shown a year-to-date return of 95.8% and has a Zacks Rank of 2 (Buy) [5] - The Medical - Outpatient and Home Healthcare industry, to which Aveanna belongs, is currently ranked 65 and has returned +6.8% this year [7] - In contrast, stocks in the Medical - Biomedical and Genetics industry, including Apogee, have gained an average of 12.8% this year, indicating that APGE is performing better than its industry peers [6]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was approximately $622 million, representing a 22.2% increase over the prior year period [3][17] - Adjusted EBITDA for Q3 was $80.1 million, reflecting a 67.5% increase compared to the prior year [3][17] - Consolidated gross margin was $202.8 million, or 32.6% [17] Business Line Data and Key Metrics Changes - Private Duty Services (PDS) revenue was approximately $514 million, a 25.6% increase, driven by 11.8 million hours of care, a volume increase of 12.9% [18] - Home Health and Hospice revenue was approximately $62.4 million, a 15.3% increase, with 9,700 total admissions, 77% of which were episodic [19] - Medical Solutions revenue was $45.1 million, essentially flat from the prior year, with approximately 91,000 unique patients served [20] Market Data and Key Metrics Changes - The episodic payer mix in home health was reported at 77%, with total episodic volume growth of 14.2% compared to the prior year [9][19] - Preferred payer agreements in private duty services increased from 22 to 30, accounting for approximately 56% of total PDS MCO volumes [8] Company Strategy and Development Direction - The company is focused on enhancing partnerships with government partners and preferred payers to create additional capacity and growth [15] - The strategic plan includes modernizing the medical solutions business and managing capital structure while producing positive free cash flow [15] - The integration of ThriveSkill Pediatrics is on target for completion by the end of the year, contributing positively to the company's growth [11] Management's Comments on Operating Environment and Future Outlook - Management noted that the demand for home and community-based care remains strong, with ongoing efforts to address labor market challenges [4][5] - The company anticipates 2025 revenue to exceed $2.375 billion and adjusted EBITDA to exceed $300 million, reflecting a strong outlook despite regulatory challenges [16][24] - Management expressed confidence in the ability to achieve normalized growth rates across all business segments [5][11] Other Important Information - The company achieved 10 rate enhancements in private duty services this year, aligning with legislative goals [7] - Liquidity at the end of Q3 was approximately $479 million, with cash on hand of approximately $146 million [22] Q&A Session Summary Question: Any headwinds for the fourth quarter? - Management indicated that Q4 should be similar to Q3, with some seasonality but no significant headwinds expected [26][27] Question: Can Q3 results be annualized for 2026 earnings? - Management emphasized the focus on finishing 2025 strong and acknowledged the positive momentum in the business [30][31] Question: How has the preferred payer strategy evolved? - Management noted that all preferred payers want more nursing capacity, indicating strong demand for services [40][41] Question: What is the outlook for organic and inorganic growth? - Management expressed interest in expanding Medicaid presence in key states and continuing to pursue acquisitions [52][53] Question: How is the integration of Thrive going? - The integration is on track, with Thrive expected to contribute approximately $100 million in revenue [55][56] Question: What are the implications of state budget uncertainties? - Management indicated that there are directional uncertainties but noted that diversification across states is beneficial [58][59]

Core Insights - Aveanna Healthcare reported $621.94 million in revenue for the quarter ended September 2025, marking a year-over-year increase of 22.2% and an EPS of $0.15 compared to $0.02 a year ago, exceeding the Zacks Consensus Estimate of $0 million and showing an EPS surprise of +87.5% [1] Financial Performance Metrics - Aveanna's shares have returned +2.9% over the past month, outperforming the Zacks S&P 500 composite's +1.3% change, with a Zacks Rank 1 (Strong Buy) indicating potential for further outperformance in the near term [3] - Key metrics for Aveanna include: - Hours - PDS: 11,822.00 hours versus 11,102.22 hours estimated by two analysts on average - Revenue rate - MS: $495.43 million versus $489.43 million estimated by two analysts on average - Unique patients served (UPS) - MS: 91 versus the two-analyst average estimate of 92 - Revenue rate - PDS: $43.51 million compared to the $42.62 million average estimate based on two analysts - Revenue - PDS: $514.43 million versus the three-analyst average estimate of $473.17 million, representing a year-over-year change of +25.6% - Revenue - MS: $45.08 million versus the three-analyst average estimate of $44.63 million, representing a year-over-year change of -0.5% - Revenue - HHH: $62.43 million compared to the $59.35 million average estimate based on three analysts, representing a change of +15.3% year over year [5]

Revenue Projections - Revenue is expected to be approximately $616 million to $624 million, representing growth of approximately 21.0% to 22.6% compared to the prior year third quarter[9]. Net Income Projections - Net income is projected to be approximately $11 million to $15 million, indicating growth of approximately 125.7% to 135.0% year-over-year[9]. Adjusted EBITDA Projections - Adjusted EBITDA is anticipated to be approximately $77 million to $81 million, reflecting growth of approximately 61.0% to 69.3% compared to the prior year third quarter[9]. - The company emphasizes the importance of EBITDA and Adjusted EBITDA as measures of performance, despite their limitations as non-GAAP financial measures[11]. Financial Results and Auditing - The financial results are preliminary estimates and subject to adjustments upon completion of financial closing procedures[4]. - The independent registered public accounting firm has not audited or reviewed the preliminary results, which means no assurance is provided regarding their accuracy[5]. - The financial results will be finalized and publicly disclosed in the upcoming consolidated financial statements[4]. Business Operations - The company operates a diversified home care platform across 38 states, focusing on pediatric and adult healthcare services[21]. Forward-Looking Statements - Forward-looking statements regarding financial position and business strategy are based on current expectations and involve risks and uncertainties[22]. Acquisition Costs - The company has incurred substantial acquisition-related and integration costs, which are excluded from Adjusted EBITDA to provide a normalized view of core operations[12].

Core Insights - Aveanna Healthcare Holdings Inc. reported strong financial results for Q3 2025, with revenue growth of 22.2% and adjusted EBITDA growth of 67.5% compared to the same period last year [2][8][13]. Financial Performance - Revenue for Q3 2025 was $621.9 million, up from $509.0 million in Q3 2024, representing an increase of $112.9 million [3][34]. - Gross margin for Q3 2025 was $202.8 million, or 32.6% of revenue, compared to $159.7 million, or 31.4% of revenue in Q3 2024, marking a 27.0% increase [4][40]. - Net income for Q3 2025 was $14.1 million, a significant recovery from a net loss of $42.8 million in Q3 2024 [5][34]. - Adjusted EBITDA for Q3 2025 was $80.1 million, or 12.9% of revenue, compared to $47.8 million, or 9.4% of revenue in Q3 2024, reflecting a 67.5% increase [6][34]. Year-to-Date Performance - For the nine-month period ended September 27, 2025, revenue was $1,770.7 million, up from $1,504.6 million for the same period in 2024, an increase of 17.7% [7][34]. - Gross margin for the nine-month period was $597.2 million, or 33.7% of revenue, compared to $463.8 million, or 30.8% of revenue in the prior year, an increase of 28.8% [9][34]. - Net income for the nine-month period was $46.3 million, compared to a net loss of $40.1 million in the same period last year [10][34]. - Adjusted EBITDA for the nine-month period was $235.9 million, or 13.3% of revenue, compared to $128.4 million, or 8.5% of revenue in the prior year, an increase of 83.7% [11][34]. Guidance and Strategic Developments - The company raised its full-year 2025 revenue guidance to greater than $2.375 billion, up from greater than $2.3 billion, and adjusted EBITDA guidance to greater than $300 million, updated from greater than $270 million [8][14][13]. - The integration of Thrive Skilled Pediatric Care is on track to be completed by the end of 2025, contributing to the company's strategic transformation [2][13]. Liquidity and Debt Management - As of September 27, 2025, the company had cash of $145.9 million and total indebtedness of $1,490.0 million [15][33]. - The company completed a refinancing amendment that expanded its revolving credit facility to $250.0 million and extended maturity dates for its loans [12][33].

Core Insights - Aveanna Healthcare (AVAH) is set to report its third-quarter 2025 results on November 6, with previous earnings per share (EPS) of 18 cents exceeding estimates by 350% [1] Preliminary Q3 Results - Preliminary results indicate revenues between $616 million and $624 million, reflecting a year-over-year growth of 21.0% to 22.6%, driven by improved reimbursement rates and increased care-hour delivery [2] - Estimated net income ranges from $11 million to $15 million, showing a growth of approximately 126% to 135% year-over-year, while adjusted EBITDA is projected between $77 million and $81 million, indicating a year-over-year increase of about 61% to 69% [3] Factors Influencing Performance - Continued improvements in reimbursement rates and expansion of preferred-payer relationships likely supported revenue quality and performance in Q3 [4] - The expansion of preferred payers is expected to enhance pricing mix and stabilize revenue per hour, particularly in Private Duty Services [5] - Improvements in caregiver recruitment and retention have likely converted strong demand into more care hours delivered, contributing to revenue growth [6] Margin and Cash Generation - Incremental operating leverage and solid margin performance earlier in the year are expected to benefit Q3 earnings, with adjusted EBITDA reaching $88.4 million at a 15% margin in Q2 [7] - A year-to-date free cash flow of approximately $36.9 million positions the company well for continued cash generation in Q3 [9] Earnings Estimates - The Zacks Consensus Estimate for Q3 EPS is set at 8 cents, implying a 300% improvement from the prior-year quarter [10] Share Price Performance - Year-to-date, AVAH shares have increased by 105.9%, outperforming the Medical Outpatient and Home Healthcare Market's growth of 5.1% and the S&P 500 Composite's increase of 18% [13][14] Long-Term Investment Outlook - Management has raised full-year guidance to over $2.3 billion in revenues and more than $270 million in adjusted EBITDA, indicating confidence in sustained growth from improved reimbursement trends and operational efficiencies [17] - The company’s diverse service segments, including Private Duty Services and Home Health & Hospice, support a favorable long-term growth setup [18] - An improving cash-generation profile enhances the company's ability to reinvest in markets and pursue acquisitions, positioning it well for future revenue and earnings growth [19]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: Aveanna Healthcare (AVAH) - Aveanna Healthcare currently holds a Momentum Style Score of A, indicating strong momentum characteristics [2] - The company has a Zacks Rank of 1 (Strong Buy), suggesting a favorable outlook compared to the market [3] Performance Metrics - AVAH shares have increased by 13.99% over the past week, outperforming the Zacks Medical - Outpatient and Home Healthcare industry, which rose by 2.56% [5] - Over the last quarter, AVAH shares have surged by 152.14%, and over the past year, they have gained 88.22%, while the S&P 500 has only increased by 7.05% and 18.26%, respectively [6] - The average 20-day trading volume for AVAH is 1,744,527 shares, indicating a bullish trend as the stock is rising with above-average volume [7] Earnings Outlook - In the past two months, one earnings estimate for AVAH has increased, while none have decreased, raising the consensus estimate from $0.42 to $0.44 [9] - For the next fiscal year, one estimate has also moved upwards with no downward revisions, indicating positive earnings momentum [9] Conclusion - Given the strong performance metrics and positive earnings outlook, AVAH is positioned as a 1 (Strong Buy) stock with a Momentum Score of A, making it a compelling investment option [11]

Group 1 - Amylyx Pharmaceuticals, Inc. (AMLX) is currently outperforming its peers in the Medical sector, with a year-to-date gain of approximately 278.6% compared to the sector average of 2.1% [4] - The Zacks Rank for AMLX is 2 (Buy), indicating a positive earnings outlook based on earnings estimates and revisions [3] - The Zacks Consensus Estimate for AMLX's full-year earnings has increased by 6.9% over the past quarter, reflecting stronger analyst sentiment [4] Group 2 - Amylyx Pharmaceuticals, Inc. is part of the Medical - Drugs industry, which consists of 146 stocks and is currently ranked 66 in the Zacks Industry Rank [6] - The Medical - Drugs industry has seen an average gain of 7.5% year-to-date, indicating that AMLX is performing better than its industry peers [6] - Another notable stock in the Medical sector is Aveanna Healthcare (AVAH), which has returned 99.6% year-to-date and has a Zacks Rank of 1 (Strong Buy) [5][7]

Group 1: Market Overview - U.S. stock futures showed slight gains, with Dow futures up approximately 0.1% on Wednesday [1] Group 2: Netflix Financial Results - Netflix reported third-quarter revenue of $11.51 billion, reflecting a year-over-year increase of 17.2%, but fell short of the Street consensus estimate of $11.514 billion [2] - The company reported earnings per share of $5.87, which also missed the Street consensus estimate of $6.97 [2] - Following the earnings report, Netflix shares dropped 6.9% to $1,156.00 in pre-market trading [2] Group 3: Other Stocks in Pre-Market Trading - Alector, Inc. saw a significant decline of 57.6% to $1.36 after announcing the discontinuation of an open-label extension for Latozinemab and a workforce reduction of about 49% [4] - Newegg Commerce, Inc. fell 22.6% to $38.70 after a 5% decline on Tuesday [4] - Terns Pharmaceuticals, Inc. dipped 13.3% to $7.00 after announcing that Phase 2 topline results for TERN-601 did not meet the threshold for further development [4] - Aveanna Healthcare Holdings Inc. shares declined 11.9% to $9.01 following the pricing of a secondary offering of common stock [4] - Critical Metals Corp. dropped 11.3% to $14.44 after a previous 17% decline due to an offering of 18.03 million shares [4] - Bgin Blockchain Limited declined 9.5% to $4.49 after a 17% drop on Tuesday [4] - Genprex, Inc. fell 8.7% to $10.50 after implementing a 1-for-50 reverse stock split, reducing outstanding shares to 1,004,326 [4] - Texas Instruments Incorporated declined 7.7% to $167.00 after issuing fourth-quarter EPS and sales guidance below analyst estimates [4] - Almonty Industries Inc. fell 7.5% to $7.75 after a 7% decline on Tuesday [4]