Zacks Investment Research downgraded
WellCare Health Plans, Inc.
) to a Zacks Rank #4 (Sell) on Jan 18, 2014.
Why the Downgrade?
Over the last 30 days, estimates moved downwards leading to an
approximately 2.7% decline in the Zacks Consensus Estimate for
full-year 2014 to $5.14 per share. In fact, WellCare has been
witnessing downward estimate revisions since it reported
third-quarter 2013 results.
WellCare's third-quarter earnings per share of $1.56 per share
were higher than the year-ago number as well as the Zacks
Consensus Estimate. However, the company is expected to incur
higher selling, general and administrative expenses owing to the
Florida MMA program implementation in the fourth quarter of 2013
which is likely to dampen the company's performance for full-year
The implementation of the Florida MMA program along with the
integration of the acquisitions that are projected to increase
the selling, general and administrative expenses impelled
WellCare to slash its full-year 2013 adjusted net income guidance
to $4.70-$4.80 per share from $470-$4.90 per share. The Zacks
Consensus Estimate for full-year 2013 is pegged at $4.70 per
share, reflecting a year-over-year decline of 4.4%.
SG&A expenses also increased 28% from the prior-year period.
Further, memberships have been declining in the Prescription Drug
Plan segment of the company. Over the first nine months in 2013,
memberships declined 11% year over year owing to the CMS rules.
Additionally, WellCare has been issuing debts to meet its capital
needs. It issued notes worth $600 million in Nov 2013 to fund
organic growth opportunities and acquisitions. A significant
increase in the company's debt burden might pose significant
threat on the company's financial position.
WellCare is scheduled to release its fourth quarter and
full-year 2013 results on Feb 12, 2014. The Zacks Consensus
Estimate for the fourth quarter is pegged at $1.18 per share,
representing a year-over-year decline of 10.7%. Also, our proven
model shows that WellCare will lag earnings estimate as it has
Zacks Rank a #4 and Earnings ESP of -3.39%
Other Stocks to Consider
ADDUS HOMECARE (ADUS): Free Stock Analysis
LCA-VISION INC (LCAV): Free Stock Analysis
WELLCARE HEALTH (WCG): Free Stock Analysis
VCA ANTECH INC (WOOF): Free Stock Analysis
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However, some better-ranked stocks in the healthcare services
VCA Antech Inc.
Addus HomeCare Corporation
). All three carry a Zacks Rank #2 (Buy).