Coventry Upgraded to Strong Buy - Analyst Blog
11 Aprile 2013 - 2:40PM
Zacks
On Apr 10, 2013, Zacks Investment Research upgraded
Coventry Health Care Inc. (CVH) to a Zacks Rank #1
(Strong Buy).
Why the Upgrade?
Coventry has strong fundamentals, including rising revenues,
strong balance sheet, efficient capital deployment and stable
ratings. Moreover, the company is improving its operating
efficiencies through acquisitions and expansions.
The impending acquisition by Aetna Inc. (AET)
is also expected to be beneficial for the company. It 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, improved sales along with the retention process
implemented since 2009 has transformed Coventry’s Commercial Risk
business into a profitable one. The acquisition of Mercy Health
Plans and an increase in renewal rates also played an important
role in the improvement. As a result, the Commercial Risk business
has become an important source of revenue.
Moreover, 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. These positives are
also driving the share price of Coventry, which hit a 52-week high
of $49.12 on Apr 10.
Coventry reported positive earnings surprise in 3 of the 4
quarters in 2012, with an average beat of 12.2%. The Zacks
Consensus Estimate for Coventry’s first quarter is currently pegged
at 77 cents, representing a year-over-year increase of 24.7%.
Other Stocks to Consider
Other healthcare stocks worth considering are Health Net
Inc. (HNT) and Addus HomeCare Corporation
(ADUS). Both these stocks carry a Zacks Rank #1 (Strong Buy).
ADDUS HOMECARE (ADUS): Free Stock Analysis Report
AETNA INC-NEW (AET): Free Stock Analysis Report
COVENTRY HLTHCR (CVH): Free Stock Analysis Report
HEALTH NET INC (HNT): Free Stock Analysis Report
To read this article on Zacks.com click here.
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