Magellan Health Services Inc.

Company Description

Magellan Health Services is a specialty health care management company. Its customers include health plans, corporations and government agencies.

Magellan Raised 2009 Guidance

On Dec 15, Magellan announced that it was raising 2009 EPS guidance to a range of $2.77 to $2.95 from its October guidance of between $2.41 to $2.70.

MGLN is seeing increased customer interest in its specialty pharmacy segment, particularly in the oncology management program. The radiology segment also continues to be active, including interest climbing from within the Medicaid market.

For 2010, it expects to report its first ever $3 billion revenue year, forecasting a range of $3 billion to $3.2 billion. Earnings per share are expected to be between $2.73 and $3.29 per share.

The analysts are currently revising their estimates to match the company's guidance. But in the last week, the fourth quarter Zacks Consensus has risen 4 cents to 85 cents as 2 out of 6 analysts raised in that time.

For 2009, the Zacks Consensus jumped to $2.86 from $2.56, which is inline with the company's revised forecast.

The 2010 Zacks Consensus also climbed to $3.02 from $2.83 as 3 out of 5 analysts raised in the last 7 days.

Magellan Beat by 33.33% in the Third Quarter

On Oct 30, Magellan reported third quarter earnings that surprised on the Zacks Consensus by 22 cents. Earnings per share were 88 cents compared to the Zacks Consensus of 66 cents. Earnings per share were just 58 cents in the year ago period.

Revenue rose to $667.6 million from $656.5 million in the year ago period. Both radiology and the specialty pharmaceutical segment saw revenue gains in the quarter compared to a year ago.

Value Fundamentals

Magellan Health Services is a Zacks #1 Rank (strong buy) stock. MGLN has a price-to-book ratio of 1.50. Magellan trades with a forward P/E of just 13.7. The company has a solid 5-year average return on equity (ROE) of 11.89%.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.

Read the full analyst report on MGLN