For Immediate Release
Chicago, IL - May 7, 2012 - Zacks.com announces the list of
stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
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Here are highlights from Friday's Analyst Blog:
Jobs Report Fails to Settle Debate
The market's attention today is focused on the home front, with
this morning's weaker-than-expected April non-farm payroll report
putting the spotlight on the labor market. This report is in-line
with what we saw from
) on Wednesday and the Bureau of Labor Statistics (BLS) in March,
but fails to answer the seasonality vs. fundamental weakness debate
going on in the market ever since the March miss.
The government agency announced April non-farm payroll gains of
115K, below expectations of 165K and March's 154K level. The March
tally was revised higher from the original 120K level. The number
of job gains in March and February were revised upwards by a
combined 53K. Private sector jobs totaled 130K in April, along the
lines of what we saw from ADP on Wednesday and in the March reading
The unemployment rate, which comes out of the Household survey,
dropped to 8.1% from 8.2%. The average workweek remained unchanged
at 34.5 hours, while average hourly earnings remained unchanged
compared to the 0.2% increase in March. The labor force
participation rate, whose low level in this recovery is generally
cited by detractors of the down-trending unemployment rate as
evidence of discouraged workers, dropped to 63.6% from 63.8% in
Today's report was expected to confirm that the seasonal factors
were behind the recent run of soft economic readings, particularly
on the labor market front. We did not get evidence of that, which
means that we will have to wait longer to get conclusive evidence
favoring either side in the ongoing seasonal vs. fundamental
The weekend presidential election in France will likely see the
incumbent lose his job and heighten uncertainties about Europe's
ability to come to grips with its problems. But economic reports
today show that the region's economic growth prospects may be
weaker than many have been expecting.
The Eurozone PMI readings came out weaker than expected this
morning, likely confirming that the region's economy remained in
recessionary territory at the start of the second quarter, the
third quarter in a row of negative growth. Lack of growth makes it
difficult for the region's leaders to address its mounting fiscal
The overall tone of recent economic data, including this BLS
report, has been very mixed, making it difficult to settle the
debate. We got a sharp drop in weekly Jobless Claims, but the BLS
and ADP data were disappointing. We got good vehicle sales, solid
manufacturing ISM, but the services ISM was on the soft side.
It is difficult to draw firm conclusions from such data. I don't
think this report improves the odds of further Fed QE, but the
market has typically been seeing that silver lining in all weak
In corporate news, we got better-than-expected earnings
) on in-line revenue.
), the insurance broker, missed earnings expectations on in-line
) posted better-than-expected results after the close on Thursday
and announced an acquisition.
Rating Action on Humana
Standard & Poor's Ratings Services ("S&P") reiterated
its long-term counterparty credit rating of 'BBB' on
) and financial strength rating of 'A-' on its subsidiaries. The
outlook was also revised to positive from stable.
Concurrently, the rating agency reiterated the financial
strength rating of 'BBB+' on Kanawha Insurance Co., a wholly owned
subsidiary of the company, with a stable outlook.
S&P also upgraded the long-term financial strength ratings
at 'A-' from 'BBB+' on Humana's health insurance operating
subsidiaries based on its group rating methodology.
The upward revision in outlook came on the back of Humana's
improving credit profile given the fast paced growth in the
Medicare business. The company has proven its stability based on
the steady earnings coupled with a strong capitalization. However,
the reimbursement risks related to Medicare Advantage ("MA") remain
The rating agency noted that Humana is well equipped to deliver
strong fiscal 2012 results, aided by positive demographics of aging
baby boomers into the Medicare population. Other factors like
increasing penetration into the Medicare market, a large number of
people eligible for both Medicare and Medicaid supported by
industry consolidation are other positives.
Humana's income has been aided by relatively lower increase in
medical costs together with its constant cost advantage. The
bonuses received by the company under the Centers for Medicare
& Medicaid Service (CMS) Quality Bonus Demonstration program
has done away with lower benchmarks and rebates under the
government funding program of MA.
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AUTOMATIC DATA (ADP): Free Stock Analysis
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