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3 Reasons WellPoint Inc Stock May Rise

WLP PE Ratio (Forward) Chart

One of the country's biggest healthcare insurers has an identity crisis. WellPoint, Inc plans to change its name to Anthem in a move to align itself with the name it attaches to the healthcare insurance plans it sells throughout the United States. That name change reflects the company's increasing focus on consumer-driven health as its business shifts away from insuring people through small group plans to plans sold through exchanges.

The advent of the Affordable Care Act and its auspicious goal of insuring more than 30 million previously uninsured Americans is having a seismic impact on the industry. With the second open enrollment period for plans sold on exchanges looming, let's consider three reasons investors may want to include WellPoint in their portfolios. But before that, it's important to emphasize that ther's no way to predict the future share price of the company -- outside bad news, a general market crash, and a host of other factors could weigh down the stock even if all three of these factors turn up in WellPoint's favor.

WLP PE Ratio (Forward) Chart

WLP P/E Ratio (Forward) data by YCharts .

Fool-worthy final thoughts

There's no guarantee that healthcare costs in the third and fourth quarters will mirror results from the first and second quarters. Patients new to insurance will likely increase their use of it over time as they become more comfortable with it. If so, that could weigh down results. Even so, WellPoint appears to have conservatively modeled for such costs, suggesting that its guidance of at least $8.60 this year isn't likely to head lower. If that proves correct (or even, again, too conservative), then investors will want to keep WellPoint on their radar, particularly given that exchange and Medicaid enrollment are expected to grow, rather than shrink, next year, too.

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The article 3 Reasons WellPoint Inc Stock May Rise originally appeared on Fool.com.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd owns Gundalow Advisors, LLC. Gundalow's clients do not have positions in the companies mentioned. The Motley Fool recommends WellPoint. The Motley Fool owns shares of WellPoint. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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