We have retained our Neutral recommendation on
) as health care reforms and high leverage of the company will
likely weigh on the positives. This healthcare provider currently
carries a Zacks Rank #3 (Hold).
Maintaining its upward debt trends since 2009, WellPoint
experienced a huge debt burden in 2012. Further, enrollments
declined owing to high levels of unemployment and are expected to
decline further in 2013 due to the carryover effect of pricing
decisions in the Administrative Services Only (ASO) market.
Moreover, health care reforms such as the ban on annual and
lifetime coverage caps, annual fees on health insurance
companies, excise tax on high premium insurance policies and
restriction on charging higher premiums from people with
pre-existing medical conditions will likely increase expenses and
Nevertheless, the company's key strength lies in its license to
market products under BCBSA, the most recognized brand in the
industry, and is thus expected to cater to more than 1.0 million
baby boomers every year through 2030 across the states where
WellPoint has a presence.
WellPoint has been witnessing substantial earnings growth over
the past few quarters, spurred by the improvements in operating
cost structure and efficient capital management. The company's
strategic partnerships and acquisitions to diversify its product
portfolio are also expected to boost earnings and surge revenue
growth in the upcoming period.
WellPoint continues to increase shareholder value. The company
spent $2.9 billion on share repurchases and dividends in 2012,
while it estimates to deploy about $2 billion for the same in
2013. The dividend yield of the company is currently 1.77%,
higher than 1.05% of another industry leader,
Other Stocks to Consider
Among other healthcare providers,
Health Net Inc.
Molina Healthcare Inc.
) carry a Zacks Rank #2 (Buy) and are worth noting.
AETNA INC-NEW (AET): Free Stock Analysis
HEALTH NET INC (HNT): Free Stock Analysis
MOLINA HLTHCR (MOH): Free Stock Analysis
WELLPOINT INC (WLP): Free Stock Analysis
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