On Apr 10, 2013, Zacks Investment Research upgraded
Coventry Health Care Inc.
) 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
) 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
Other Stocks to Consider
Other healthcare stocks worth considering are
Health Net Inc.
Addus HomeCare Corporation
). Both these stocks carry a Zacks Rank #1 (Strong Buy).
ADDUS HOMECARE (ADUS): Free Stock Analysis
AETNA INC-NEW (AET): Free Stock Analysis
COVENTRY HLTHCR (CVH): Free Stock Analysis
HEALTH NET INC (HNT): Free Stock Analysis
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