Coventry Hits 52-Week High - Analyst Blog
03 Aprile 2013 - 5:42PM
Zacks
On Apr 2, 2013, shares of Coventry Health Care
Inc. (CVH) reached a 52-week high of $48.67.
Coventry reported positive earnings surprise in 3 of the 4
quarters in 2012, with an average beat of 12.2%. Further, our
proven model shows that this healthcare company is likely to beat
earnings in the first quarter of 2013 because it has a right
combination of Positive Zacks ESP (Read: Zacks Earnings ESP: A Better Method)
and Zacks Rank #2 (Buy).
ESP (Earnings Surprise Prediction), which represents the
difference between the Most Accurate Estimate and the Zacks
Consensus Estimate is 9.09%. The Zacks Consensus Estimate for
Coventry’s first quarter is currently pegged at 77 cents,
representing a year over year increase of 24.7%.
Moreover, Coventry is improving its operating efficiencies
through acquisitions and expansions. The impending takeover by
Aetna Inc. (AET), scheduled to close by mid-2013,
will allow the company to cater to a larger market and open avenues
for future partnerships to improve the quality and affordability of
its services.
Further, with no debt repayment scheduled in the next couple of
years, the company has ample scope for strategic acquisitions as
well as share repurchases and dividend payouts. A strong balance
sheet, efficient capital deployment and stable ratings are the
other positives.
The valuation of Coventry looks stretched. Although the forward
price-to-earnings ratio is higher than peers, the price-to-book
value ratio lags peers and the return on equity of 8.9% is
substantially lower than the peer group average of 12.3%. However,
the 1-year return from the stock is 35.7%, much above S&P’s
return of 11.5%.
Other healthcare stocks worth considering are Health Net
Inc. (HNT) – Zacks Rank #1 (Strong Buy) and
LCA-Vision Inc. (LCAV) – Zacks Rank #2 (Buy).
AETNA INC-NEW (AET): Free Stock Analysis Report
COVENTRY HLTHCR (CVH): Free Stock Analysis Report
HEALTH NET INC (HNT): Free Stock Analysis Report
LCA-VISION INC (LCAV): Free Stock Analysis Report
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