Earlier this week,
Magellan Health Services Inc.
) revealed its earnings guidance for 2013. The company expects
earnings per share (EPS) of $3.22-$3.85 for the year.
Additionally, Magellan disclosed the net revenue guidance
range of $3.56-$3.74 billion for the year ahead. Further, net
income is expected to stand between $91 million and $109 million,
while segment profit is projected to be $250-$270 million.
Segment profit refers to earning before income taxes and excludes
stock compensation expense, depreciation and amortization,
interest expense, interest income, gain on the sale of assets,
and special charges or benefits.
Magellan's projected 2013 EPS is substantially lower than the
Zacks Consensus Estimate of $4.10. However, we expect the Zacks
Consensus Estimate to go down once analysts start adjusting their
estimates to include the impact of the company's guidance. The
Zacks Consensus Estimate for Magellan's 2013 revenue stands at
$3.62 billion, within the company's guidance range.
The EPS guidance does not include the impact of any future
share repurchases. However, it includes the impact of the reduced
share count due to the buybacks till date. Magellan has spent
$49.5 until now under its $200 million share repurchase program,
authorized in October last year. Moreover, between Oct 26, 2012
and Dec 10, 2012, the company bought back about 0.34 million
shares for $16.8 million. Shares outstanding as of Dec 10, 2012
were 27.4 million.
Magellan also disclosed that its operating and financial
performance in 2012 has been satisfactory and the company
received several new contracts during the year. Hence, it
affirmed the 2012 guidance for segment profit at $240-$260
million, net income at $135-$155 million, and EPS at $4.83-$5.55.
The Zacks Consensus Estimate for the company's 2012 EPS is $4.53,
lower than the company's guidance range.
Magellan carries a Zacks #3 Rank (Hold). We maintain a
long-term Neutral recommendation on the stock. Another healthcare
Health Net, Inc.
) carries a Zacks #2 Rank (Buy).
HEALTH NET INC (HNT): Free Stock Analysis
MAGELLAN HLTH (MGLN): Free Stock Analysis
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