Back to top

Analyst Blog

On Apr 10, 2013, Zacks Investment Research upgraded Coventry Health Care Inc. to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Coventry has strong fundamentals, including rising revenues, strong balance sheet, efficient capital deployment and stable ratings. Moreover, the company is improving its operating efficiencies through acquisitions and expansions.

The impending acquisition by Aetna Inc. (AET - Analyst Report) is also expected to be beneficial for the company. It will allow the company to cater to a larger market and open avenues for future partnerships to improve the quality and affordability of its services.

Further, improved sales along with the retention process implemented since 2009 has transformed Coventry’s Commercial Risk business into a profitable one. The acquisition of Mercy Health Plans and an increase in renewal rates also played an important role in the improvement. As a result, the Commercial Risk business has become an important source of revenue.

Moreover, with no debt repayment scheduled in the next couple of years, the company has ample scope for strategic acquisitions as well as share repurchases and dividend payouts. These positives are also driving the share price of Coventry, which hit a 52-week high of $49.12 on Apr 10.

Coventry reported positive earnings surprise in 3 of the 4 quarters in 2012, with an average beat of 12.2%. The Zacks Consensus Estimate for Coventry’s first quarter is currently pegged at 77 cents, representing a year-over-year increase of 24.7%.

Other Stocks to Consider

Other healthcare stocks worth considering are Health Net Inc. (HNT - Analyst Report) and Addus HomeCare Corporation (ADUS - Snapshot Report). Both these stocks carry a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
QIHOO 360 T… QIHU 95.04 +4.95%
PILGRIMS PR… PPC 31.52 +3.72%
WILLIAMS(C)… CWEI 138.97 +3.55%
FLAMEL TECH… FLML 14.02 +3.16%
CALLON PETE… CPE 11.50 +3.14%