Reiterate Healthways at Neutral - Analyst Blog
March 12 2013 - 11:20AM
Zacks
On Mar 7, 2013, we retained
Healthways (HWAY) at Neutral after the company
missed Zacks Consensus Estimate for earnings while reporting in
line revenues for fourth quarter 2012. Healthways is still
recovering from the loss of the Cigna contract.
Why the
Retention?
Healthways released its results for
the fourth quarter on Feb 7. The company posted adjusted earnings
per share of 5 cents per share, missing the Zacks Consensus
Estimate by a penny. Revenues in the reported quarter dropped 2.7%
year over year to $175 million, in line with the Zacks Consensus
Estimate.
Over the past 60 days, the Zacks
Consensus Estimate for 2013 has dropped by 5 cents to 30 cents. For
2014, the Zacks Consensus Estimate has declined by 6 cents to 58
cents during the same timeframe.
For 2013, Healthways continues to
expect sales in a band of $710 million and $750 million, up 5% to
11% year over year. HWAY expects higher revenues for 2013 despite a
drop of $80 million from the end of the Cigna and one other
contract. Healthways forecasts higher sales in the second half of
2013 as fresh contracts inked in 2012 will take 6 months to 24
months to take off.
Healthways guided to earnings per
share of about 25 cents to 35 cents for 2013. Loss per share is
expected to be 15 cents for the first quarter of 2013.
The Healthways model encourages
people to make favorable lifestyle changes that lead to enhanced
well-being, reduced healthcare costs, improved performance and
economic value for customers. Healthways is the leader in a
strategically critical and rapidly evolving part of the health care
services market. Its fitness program (SilverSneakers) for seniors
is available at over 15,000 centers across the U.S. and caters to
over nine million eligible enrollees. Healthways competes with
Express Scripts Holding Company (ESRX) among
others.
Other Stocks to
Consider
We currently have a Zacks Rank #3
(Hold) on Healthways. We are more positive about Air
Methods Corp. (AIRM) and Covance Inc.
(CVD), which carry a Zacks Rank #1 (Strong Buy) and Zacks Rank #2
(Buy), respectively, and are expected to do well.
AIR METHODS CRP (AIRM): Free Stock Analysis Report
COVANCE INC (CVD): Free Stock Analysis Report
EXPRESS SCRIPTS (ESRX): Free Stock Analysis Report
HEALTHWAYS INC (HWAY): Free Stock Analysis Report
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