We expect health benefits company,
) to beat expectations when it reports fourth-quarter 2013
results on Jan 29, 2014.
Why a Likely Positive Surprise?
Our proven model shows that WellPoint is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP:
Expected Surprise Prediction or
, which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, stands at 2.33%. This
is very meaningful and a leading indicator of a likely positive
earnings surprise for shares.
Zacks Rank #2 (Buy):
Note that stocks with Zacks Ranks #1, 2 and 3 have a
significantly higher chance of beating earnings. The Sell-rated
stocks (#4 and 5) should never be considered going into an
The combination of WellPoint's Zacks Rank #2 (Buy) and 2.33% ESP
make us very confident of a positive earnings beat.
What is Driving the Better Than Expected
Possession of an independent license for marketing products under
the Blue Cross and Blue Shield Association (BCBSA), the
Amerigroup acquisition and success in the Administrative Services
Only (ASO) marketplace are expected to lead to a positive
The positive trend is reflected in the trailing four-quarter
average surprise of 18.1%, which was greatly supported by the
14.8% surprise in the last-reported quarter. This was possible
because WellPoint did impressively well in enhancing memberships
and incurred lower-than-expected medical costs. Impressive
performance by the Commercial and Government segments also
favored the results.
Other Stocks to Consider
WellPoint is not the only firm looking up this earnings
season. Other stocks in the same sector that have both a positive
earnings ESP and a favorable Zacks Rank are:
), with Earnings ESP of +2.90% and Zacks Rank #3 (Hold).
), with Earnings ESP of +4.55% and Zacks Rank #3.
), with Earnings ESP of +9.09% and Zacks Rank #3.
AETNA INC-NEW (AET): Free Stock Analysis
HEALTHSOUTH CP (HLS): Free Stock Analysis
PHARMERICA CORP (PMC): Free Stock Analysis
WELLPOINT INC (WLP): Free Stock Analysis
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