CHICAGO, June 9, 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: CIGNA Corp. (NYSE: CI),
UnitedHealth Corp. (NYSE: UNH), Wellpoint Inc. (NYSE:
WLP), Aetna Inc. (NYSE: AET) and Ulta Salon, Cosmetics & Fragrance Inc.
(Nasdaq: ULTA).
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Here are highlights from Wednesday's Analyst Blog:
CIGNA Upgraded to Outperform
We are upgrading our recommendation on the shares of CIGNA
Corp. (NYSE: CI) to Outperform from Neutral following an upward
revision in its guidance post first quarter results.
Philadelphia-based CIGNA's
first quarter consolidated revenues grew to $5.4 billion marking an 8% hike over the first
quarter of 2010, after excluding the impact of its planned exit
from the individual Medicare Private Fee-for-Service business. The
upside reflects solid growth in each of CIGNA'a targeted market
segments.
CIGNA's first quarter consolidated earnings stood at
$375 million, representing a 33%
improvement from the comparable period last year. Consequently, the
quarter recorded earnings per share of $1.37, reflecting a 36% increase compared with
the year-ago quarter. The earnings upside mainly resulted from a
strong globally diversified portfolio of businesses and solid
execution of the company's growth strategy.
In Health Care, first quarter 2011 premiums and fees grew 6%
sequentially, excluding the impact of the exited business. This
reflects continued membership growth in the company's targeted
customer segments and increased specialty penetration. The first
quarter earnings for Health Care were $246
million, including the impact of favorable prior claim
development and sustained growth.
As part of its long-term strategy, CIGNA continues to focus on
improving its operating expenses through a combination of expense
efficiencies and business growth. For the first quarter of 2011,
medical operating expenses were slightly down compared with the
year-earlier quarter.
CIGNA's International segment also continued to deliver
attractive growth and strong margins. Premiums and fees grew 32%
quarter-over-quarter, driven by strong customer retention and solid
new sales within the health, life and accident and expatriate
benefits businesses, including contributions from Vanbreda
International. This top-line growth drove strong earnings of
$77 million during the quarter.
Management expects full-year earnings from International in the
range of $275 million to $295
million, marking a $15 million
increase over its previous guidance.
On the basis of its commendable first quarter results, CIGNA now
expects full-year 2011 consolidated adjusted income from operations
to range between $1.275 billion and $1.365
billion. This revised range is $75
million to $85 million higher than its previous expectations
and reflects an increase in outlook for each of its ongoing
businesses. Management now anticipates full-year earnings per share
(EPS) in the range of $4.65 to $5.00,
which is an improvement of 30 cents to 35
cents per share over its previous EPS forecast.
Further, CIGNA expects Health Care earnings in the range of
$860 million to $900 million, which
is an improvement of $40 million to $60
million from earlier guidance range. This improvement
reflects a favorable prior-year claim development recognized in the
first quarter and continued effective execution of its growth
strategy. The company remains on track to deliver a full-year total
Health Care operating expense ratio of 26.5% to 27% and medical
operating expenses of $235 to $240
per member per year, with continuous investments in technology and
service capabilities to support ongoing growth.
With respect to medical membership, CIGNA expects full-year 2011
membership growth of 1% to 3%, excluding the planned non-strategic
market exits.
CIGNA, which competes with UnitedHealth Corp. (NYSE:
UNH), Wellpoint Inc. (NYSE: WLP), and Aetna Inc.
(NYSE: AET), continues to have a strong balance sheet and good
financial flexibility. Its subsidiaries are generating significant
free cash flow, which reflects a strong return on capital in each
of its ongoing businesses. CIGNA ended the quarter with cash and
short-term investments of $790
million. During the first quarter, the company repurchased
3.9 million shares of CIGNA's common stock and subsequently
repurchased an additional 1 million shares through May 4. Till date, CIGNA has repurchased 4.9
million shares of the stock for approximately $210 million.
After considering subsidiary dividends, pension contributions
and other sources and uses, CIGNA expects to have about
$1.1 billion available for capital
deployment in order to deliver sustainable value for the benefit of
customers and shareholders in 2011. CIGNA would prioritize its
capital mainly in three ways. Firstly, it would deploy the capital
in order to grow its ongoing operations, and fund its pension plan
and Run-off Reinsurance business. Secondly, it would consider
mergers and acquisitions, with the focus on acquiring capabilities
in scale; and finally, it would return capital to investors,
primarily through share repurchase.
Ulta Salon Tops on Strong Traffic
Ulta Salon, Cosmetics &
Fragrance Inc. (Nasdaq: ULTA) posted first quarter 2011
earnings of 37 cents per share, which
surpassed the Zacks Consensus Estimate of 31
cents. Quarterly earnings shot up 60.9% from the year-ago
quarter earnings of 23 cents per
share and also beat management's guided range of 29 cents to 31 cents.
The better-than-expected results were due to double-digit growth
in the top line resulting from robust guest count.
Quarter Highlight
Net sales in the quarter increased 20.6% year over year to
$386.0 million and were also above
the Zacks Consensus Estimate of $371.0
million. The increase was driven by a rise in comparable
store sales, which escalated 11.1% from 10.8% reported in the
prior-year quarter. The company also benefited from unit
expansion.
According to management, the enhancement was spread across all
major categories and generated this marked improvement in results,
amid a sluggish economic recovery, based on dynamic marketing
initiatives and brands strategies implemented in 2009.
Gross margin expanded 230 basis points (bps) year over year to
34.9% in the first quarter, mainly attributable to cost reductions
through improved supply chain and marketing leverage.
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