What Happened:

Shares of wellness company Medifast (NYSE:MED) fell 26.8% in the morning session after the company reported first quarter results that narrowly topped analysts' revenue expectations. However, revenue declined 48% in absolute terms, primarily driven by a decline in active earning OPTAVIA Coaches as well as lower Coach productivity. The company also called out a $9.1 million headwind due to timing differences from changes to sales order terms. Looking ahead, guidance was weak. The company's revenue and EPS guidance for next quarter missed analysts' expectations by a large amount, and its operating margin missed Wall Street's estimates. Overall, the results were highly disappointing.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Medifast? Access our full analysis report here, it's free.

What is the market telling us:

Medifast's shares are not very volatile than the market average and over the last year have had only 18 moves greater than 5%. Moves this big are very rare for Medifast and that is indicating to us that this news had a significant impact on the market's perception of the business.

Medifast is down 61.1% since the beginning of the year, and at $27.30 per share it is trading 74.5% below its 52-week high of $107.06 from July 2023. Investors who bought $1,000 worth of Medifast's shares 5 years ago would now be looking at an investment worth $186.17.

When a company has more cash than it knows what to do with, buying back its own shares can make a lot of sense–as long as the price is right. Luckily, we’ve found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Special Free Report on a fallen angel growth story that is already recovering from a setback.