CHICAGO, May 2, 2011 /PRNewswire/ -- Zacks.com announces
the list of stocks featured in the Analyst Blog. Every day the
Zacks Equity Research analysts discuss the latest news and events
impacting stocks and the financial markets. Stocks recently
featured in the blog include: Honda Motor Co. (NYSE:
HMC), Coventry Health Care Inc. (NYSE: CVH),
Unitedhealth Group, Inc. (NYSE: UNH), Aetna
Inc. (NYSE: AET) and WellPoint
Inc. (NYSE: WLP).
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Here are highlights from Friday's Analyst Blog:
Honda Skids but Doubles Profit
Honda Motor Co. (NYSE: HMC) revealed a 38% fall in
profit to Yen 44.55 billion
($536 million) or Yen 24.72 per share (30
cents per share) in the fourth quarter of the fiscal year
ended March 31, 2011 from
Yen 72.18 billion or Yen 39.78 per share in the same quarter of prior
fiscal year.
The decline in profit was attributable to unfavorable currency
translation effects, higher selling, general and administrative
(SG&A) expenses and the tsunami and earthquake in Japan. These more than offset the positive
impact from cost reduction measures, lower R&D expenses,
increase in sales volume (except in the Automobile segment) and
model mix, and operating income related to licensing
agreements.
Consolidated net sales and other operating revenues slid 3% to
Yen 2.21 trillion ($26.62 billion) on the back of same factors
outlined above, despite increased revenues in the motorcycle
business and revenues related to licensing agreements. However, at
constant exchange rates, revenues increased 3.3%. Consolidated
operating profit plummeted 52% to Yen 46.21
billion ($556 million) from
Yen 96.10 billion due to the same
factors affecting the net income.
Coventry Surpasses Estimates
Coventry Health Care Inc. (NYSE: CVH)
reported its first-quarter adjusted earnings of 66 cents per share, exceeding the Zacks Consensus
Estimate of 53 cents.
Coventry's adjusted earnings in the first quarter exclude the
favorable impact of 8 cents from the
Medicare Advantage Private Fee-for-Service (MA-PFFS) product. The
Medicare offering stands discontinued from January 1, 2010.
Including the impact of this item, Coventry reported net income
of $110.2 million or 74 cents per share in the first quarter as
opposed to $97.3 million or
66 cents per share in the prior-year
period.
The improved showing was due to solid performance across all
lines of its businesses. Besides, continued emphasis on cost
containment throughout the organization and excellent liquidity
position resulted in positive results.
Behind the Headlines
Total operating revenues in the reported quarter climbed 6.6%
year over year to $3.05 billion, same
as forecasted by the Zacks Consensus Estimate of $3.05 billion.
During the first quarter, managed care premiums increased 7.2%
to $2.76 billion, while revenues from
management services jumped by 1.8% year over year to $293.6 million.
Coventry witnessed total operating expenses for the reported
quarter of $2.88 billion, up 6.4%
from the year-ago quarter. Medical costs, the major operating
expense component, hiked 7.6% to $2.28
billion. Likewise, Coventry's cost of sales, selling,
general and administrative expenses (SG&A expenses) and
depreciation and amortization (D&A) also increased over the
said period.
Total membership in the quarter increased 6.0% to 4.6 million
from the prior quarter.
Comparisons with Competitors
Rival company Unitedhealth Group, Inc. (NYSE:
UNH) reported first-quarter results on April
21, 2011. Income from continuing operations was $1.22 per share, substantially better than the
Zacks Consensus Estimate of 89
cents.
Aetna Inc. (NYSE: AET) reported first-quarter
operating earnings of $1.43 per share
on April 28, well ahead of the Zacks
Consensus Estimate of 96 cents.
WellPoint Inc. (NYSE: WLP) reported first-quarter
results on January 26 with income
from continuing operations of $2.35
per share, surpassing the Zacks Consensus Estimate of $1.87.
Outlook for 2011
For fiscal 2011, Coventry expects to earn between $2.65 and $2.85 per share.
Coventry projects risk revenue of $10.50
billion to $10.90 billion and management services revenue of
$1.18 billion to $1.20 billion for
fiscal 2011.
The company expects its consolidated revenue guidance to a range
of $11.68 billion – $12.10 billion. Coventry's consolidated MLR is
expected between 81.9% and 82.5% in fiscal 2011.
Coventry anticipates cost of sales in the range of $264.0 million to $271.0 million, with SG&A
expenses reiterated in the range of $2.00
billion to $2.04 billion, D&A between $136.0 million and $140.0 million, and interest
expense in the range of $95.0 million to
$102.0 million in fiscal 2011.
Coventry's other income is expected to range between
$74.0 million and $78.0 million in
fiscal 2011.
Shares outstanding at year end 2011 are expected to be 147.0
million to 149.0 million.
Our Take
Coventry has a solid fundamental business and continues to grow
with all seven core businesses performing at or above expectations.
Further, we believe that Coventry is also growing on the
acquisition front, as it is making continuous efforts to expand its
footprint in Missouri and
Arkansas.
Additionally, Coventry's acquisition of MHP and its subsidiaries
is expected to be slightly accretive to its 2011 earnings and will
serve more than 1.2 million members in its six-state Midwest
region.
We believe that Coventry's acquisitive growth strategy will help
it to leverage its regional service centers and improve operating
efficiencies, largely through economies of scale.
We maintain a Neutral recommendation on Coventry in the long
term. The quantitative Zacks #3 Rank (short-term Hold rating) for
the company indicates no clear directional pressure on the stock
over the near term.
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