On Jun 10, Zacks Investment Research upgraded
WellCare Health Plans, Inc
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
WellCare Health witnessed rising earnings estimates on the back of
strong first-quarter 2014 results. With respect to earnings
surprise, the company delivered positive surprises in 3 of the last
WellCare Health reported operating net earnings of $1.13 a share,
steering past the Zacks Consensus Estimate of 4 cents. Earnings
improved 79% year over year on meaningful growth and favorable
performance of the Medicaid Health plan.
As on Mar 31, 2014, members of the Medicaid Health Plan increased
11% year over year as of Mar 2014. The improvement largely stemmed
from organic growth in Kentucky as well as eligibility expansion
under the Affordable Care Act and transfer of members following the
exit of a competitor in Jul 2013. The Missouri Care acquisition
also contributed to the upside. Furthermore, gross margin expanded
90 basis points on a lower medical benefit ratio.
Following solid first-quarter results and better-than-expected
performance at the Medicaid Health Plans segment, WellCare Health
raised its 2014 operating earnings guidance to the range of
$4.40-$4.75 from $3.75-$4.05. The Zacks Consensus Estimate of $4.21
falls below the company's guided range.
Strong results prompted upward revisions in most of the estimates
over the last 60 days. The Zacks Consensus Estimate for 2014 is
currently pegged at $4.21 (up 4.2% as 4 of 5 estimates moved north)
and for 2015 the estimate stands at $5.07 (up 3.9% as 7 of 10
estimates were revised higher). The expected long-term growth rate
for the stock is 11.50%.
Other Stocks to Consider
Investors interested in the healthcare service provider industry
may also consider stocks like
Select Medical Holdings Corp.
). While Select Medical shares the same Zacks Rank as WellCare
Health, Aetna and Centene Corp. carry a Zacks Rank #2 (Buy).
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WELLCARE HEALTH (WCG): Free Stock Analysis
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