Health Net Boosts Buyback Program - Analyst Blog


In a bid to deploy its excess capital efficiently, the board of Health Net Inc. ( HNT ) increased the company's share repurchase authorization by $323.7 million to $400 million. The shares can be repurchased either through open market transactions, private placements or accelerated share repurchase programs, subject to corporate and regulatory restrictions.

The buybacks will take place periodically, depending on Health Net's share value, market conditions, restrictions imposed by debt holders and the economic environment. Moreover, the board retains the authority to suspend or terminate the program as per requirement.

The previous $300 million share repurchase program was approved in May 2011, pursuant to which Health Net repurchased 8.7 million shares for an aggregate price of $223.7 million in 2011. Remaining authorization under repurchase program stood at $76.3 million as on December 31, 2011.

Health Net's strong cash position aids the company's capital deployment, thereby enhancing shareholder value. The company had cash and investments of approximately $1.8 billion at the end of 2011.

The increase in buyback authorization is expected to boost investors' confidence in Health Net shares, as reflected in the company's stock price. On Tuesday, the shares of the company closed at $38.56, up 0.84%, on the New York Stock Exchange.

Currently, the Zacks Consensus Estimate for Health Net's first-quarter earnings stands at 62 cents per share, up about 1.4% year over year. Five of the 15 analysts covering the stock revised their estimates downward in the last 30 days, while one upward revision was witnessed.

For 2012, earnings are pegged at $3.36 per share, climbing about 9.0% over 2011. Health Net competes with WellPoint Inc. ( WLP ) and UnitedHealth Group Inc. ( UNH ).

Currently, Health Net carries a Zacks #3 Rank, implying a short-term Hold rating. Considering the fundamentals, we are also maintaining our long-term Neutral recommendation on the shares.

HEALTH NET INC ( HNT ): Free Stock Analysis Report
UNITEDHEALTH GP ( UNH ): Free Stock Analysis Report

WELLPOINT INC ( WLP ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: HNT , UNH , WLP

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