For Immediate Release
Chicago, IL - May 1, 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
blog include
Comcast Corp
. (
CMCSA
),
Aetna Inc.
(
AET
),
Humana Inc.
(
HUM
),
CIGNA Corp.
(
CI
) and
WellPoint Inc.
(
WLP
).
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free Profit from the Pros newsletter:
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Here are highlights from Monday's Analyst Blog:
Earnings Preview: Comcast
Comcast Corp
. (
CMCSA
) is slated to release its first quarter 2012 results on Wednesday,
May 2, 2012, before the opening bell. The current Zacks Consensus
Estimate for the first quarter is pegged at 43 cents per share,
representing annualized growth of 18.13%.
With respect to earnings surprises over the trailing four
quarters, Comcast has outperformed the Zacks Consensus Estimate in
three of the last four quarters. The average earnings surprise was
0.68%.
Fourth Quarter Recap
On February 15, 2012, Comcast reported its fourth quarter 2011
financial results. GAAP net income for the fourth quarter of 2011
was $1,287 million or 47 cents per share compared with a net income
of $1,018 million or 36 cents per share in the prior-year quarter.
However, quarterly EPS of 47 cents was ahead of the Zacks Consensus
Estimate of 43 cents.
The fourth-quarter 2011 total revenue came in at $15,042
million, up 54.7 % year over year, and well above the Zacks
Consensus Estimate of $14,809 million. Operating margin in the
fourth quarter of 2011 was 19.4% compared with 20.7% in the
prior-year quarter.
Agreement of Estimate Revisions
In the last 30 days, out of the 19 analysts covering the stock,
two analysts increased the EPS estimate for the first quarter of
2012 while two reduced. Similarly, for the second quarter of fiscal
2012, out of the 18 analysts covering the stock, three analysts
revised the estimate upwards while one analyst came down.
For fiscal 2012, in the last 30 days, out of the 21 analysts
covering the stock, five analysts raised the EPS estimate but one
reduced. Likewise, for fiscal 2013, out of the 19 analysts covering
the stock, five analysts increased the EPS estimates while only one
moved in the opposite direction.
Magnitude of Estimate Revisions
During the last 30 days, the current Zacks Consensus Estimate
was just a penny above the previous estimate of 42 cents for the
first quarter of 2012, while for the second quarter of 2012 the
current Zacks Consensus Estimate wasjust a penny above the previous
estimate of 42 cents.
Likewise, for fiscal 2012, the current Zacks Consensus Estimate
was 2 cents above the previous estimate of $1.86. Similarly, for
fiscal 2013, the current Zacks Consensus Estimate was 2 cents above
the previous estimate of $2.19.
Earnings Surprises
The current Zacks Consensus Estimate for the ongoing quarter
contains a 2.33% downside potential but the same for the second
quarter of fiscal 2012 reflects a 2.04% upside potential
(essentially a proxy for future earnings surprises). However,
fiscal 2012 has the Zacks Consensus Estimate downside risk of 1.06%
but the growth potential is 1.36%.
Our Recommendation
Comcast is becoming a media powerhouse armed with its unique
control over both content and distribution after completing the
acquisition of a controlling stake in NBC Universal. The company is
also aggressively deploying the DOCSIS 3.0 (also called Wideband)
technology to upgrade its existing customers to high-speed network
together with all digital networks.
However, we believe that Comcast is fairly valued at current
levels as the stock price has moved up by a whopping 56% last
year.
S&P Positive on Aetna
Following
Aetna Inc.
's (
AET
) first quarter earnings release, the rating agency Standard and
Poor's undertook a favorable rating action on the health insurer's
creditworthiness. The agency raised the financial strength ratings
of the company's subsidiaries by one notch to "A+" from "A," while
affirming the A-/A-2 counterparty credit rating on the parent
company. All these ratings are of investment grade and carry a
positive outlook.
The financial strength and credit ratings of a company are
important metrics to determine its ability to fulfill policyholder
obligations. These also affect investor confidence in the company's
potential and its competitiveness.
An investment-grade debt rating with a positive outlook reflects
optimism about Aetna's future performance. A positive outlook
implies that the company's rating may be raised over the following
12-month period.
S&P was particularly impressed with Aetna's sound balance
sheet, favorable operating results, strong cash flow generation,
sufficient liquidity and financial flexibility. According to
S&P, Aetna is on a stronger footing compared with its
peers
Humana Inc.
(
HUM
),
CIGNA Corp.
(
CI
) and
WellPoint Inc.
(
WLP
). It also noted that the gradually improving health insurance
marketplace will further strengthen the company's position.
The rating agency noted that despite significant Health Care
Reform uncertainty, Aetna was able to secure its operating
margins.
Aetna's ratings may be raised another notch, if the company
performs in line with the earnings expectations of the rating
agency. The rating agency expects Aetna's total revenue to be more
than $36 billion, medical membership of 18.5 million (which is
higher that Aetna's guidance of 18.2 million members), pretax GAAP
operating income in the range of $2.6-$3.0 billion and cash flow in
the range of $3.4-$3.6 billion
S&P maintained the rating of the parent company two levels
below the core operating units (generally the rating agency keeps a
difference of three notches between the parent and the core
operating units). The two-notch gap in the ratings reflect
consistent dividends from Aetna's diversified units, which minimize
fluctuations in cash flow from the subsidiaries to the holding
company.
S&P expects the company to get $1.7 - $2.0 billion in
dividends from its subsidiaries, while Aetna expects subsidiary
dividend of approximately $1.7 billion.
On the flip side, the rating agency pointed out that Aetna
remains exposed to industry risks related to the Supreme Court
hearing on the Health Care Reform and its negative impact on the
health insurer, if any.
We are confident that the health insurer major will see a
favorable rating outcome going forward, given the pace at which it
is evolving. The company has made considerable investments in
products and technology, with an intention to extend its core
health business and also to capitalize on exciting new consumer and
provider opportunities emerging in the marketplace.
Aetna's strong operating results and significant capital
generation will allow it to make further investments. The company
is expected to continue performing well in 2012 backed by the
performance of the Medicaid and Medicare segments, a fast growing
health services segment and a strong balance sheet.
Aetna currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. Considering its better-than-average
fundamentals, we are maintaining our long-term Outperform
recommendation on the shares.
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AETNA INC-NEW (
AET
): Free Stock Analysis Report
CIGNA CORP (
CI
): Free Stock Analysis Report
COMCAST CORP A (
CMCSA
): Free Stock Analysis Report
HUMANA INC NEW (
HUM
): Free Stock Analysis Report
WELLPOINT INC (
WLP
): Free Stock Analysis Report
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