Wednesday, April 21, 2010

Insurance Industry Shifts To Child Welfare

As Healthcare reform begins to stimulate the economy with the expansion of Medicaid, Medicare and TRICARE, insurance companies are restructuring to participate. My only concern is that the insurance groups are crossing over, entering the unknown industry of child welfare.

There are many possibilities for the sector of child welfare to grow, but if these companies are not properly trained in dealing with contracts, there is going to be an increase in the area of child welfare fraud.

April 20, 2010 10:02 AM EDT

Wedbush initiated coverage on a large group of Managed Care stocks this morning, saying that reform risks now outweigh positive fundamentals. The firms aid it expects Medicaid and Medicare sectors to outperform and the commercial sector to remain relatively flat.

* AMERIGROUP (NYSE: AGP) - Outperform rating with a $41 price target. Calls the stock a "Top Pick"; says "undervalued given the firms potential gains in Medicaid expansion, favorable risk reward outlook for upcoming contract awards, isolation from reform-related margin compression, and low current valuation at a 21% discount to its historical five-year average PE."
* Health Net (NYSE: HNT) - Outperform with a $26 price target. Named a "Top Pick"; sees strong margin expansion potential versus peers and notes "low exposure to margin compression risk from reform and could see a 13-15% boost to earnings if it retains the TRICARE contract, which we view as likely."
* Centene (NYSE: CNC) - Outperform with a $29 price target. Also named a "Top Pick"; calls the stock "undervalued given the firms favorable geographic mix, potential to see the largest Medicaid expansion gains, and greater margin stability than peers due to revenue diversification."
* Humana (NYSE: HUM) - Outperform with a $53 price target. "We believe the opportunity Humana faces for long-term growth through Medicare market expansion is underappreciated and the company is undervalued at its current 21% discount to the group and 38% discount to its historical PE. "
* Molina (NYSE: MOH) - Outperform with a $28 price target. Calls the stock undervalued given potential Medicaid expansion. The firm also likes that the company is more-or-less isolated from "reform related margin compression."
* Universal American (NYSE: UAM) - Outperform with an $18 price target. "Positioned to capitalize on Medicare growth with 52% of revenue derived from the MA market which we estimate will grow by 7
million members and $10 billion in revenue by 2015."
* CIGNA (NYSE: CI) - Neutral with a $39 price target. "...well positioned to weather the healthcare reform storm, but the company will loose some of the top-line upside from the pricing cycle and expansion of government programs."
* Unitedhealth (NYSE: UNH) - Neutral with a $35 price target. notes that the company is "the largest managed care plan" and thus "enjoys a sustainable competitive positioning due to its national scale and
high local market share."
* WellPoint (NYSE: WLP) - Neutral with a $65 price target. Sees the company's "weighting towards commercial risk to drive above average margin expansion in the rising pricing cycle."
* Healthspring (NYSE: HS) - Neutral with a $19 price target. "HealthSpring has the greatest leverage in the group towards Medicare growth, however concerns about margin compression us more cautious on the company."
* Coventry (NYSE: CVH) - Neutral with a $26 price target. Sees the company taking advantage of a recovery in employment "due to its leverage to the small and middle market exposure."
* Aetna (NYSE: AET) - Neutral with a $34 price target. Calls the stock expensive given, "1) the early stage in the turn around 2) modest enrollment loss guidance associated with the re-pricing and 3) expectations of below peer margin expansion."
* Wellcare (NYSE: WCG) - Underperform with a $28 price target. The firm says several issues will weigh on the stock: it is "emerging from a Medicaid fraud investigation, Medicare sanction, and an unprecedented level of changes in senior management...."

Wedbush Starts Managed Care Stocks: AGP, HNT, CNC Named Top Picks, HUM, MOH, UAM Rated Outperform, WCG Rated Underperform

More News related to AET

* Aetna Announces Plan to Extend Coverage for Young Adults Before Reform Law Takes Effect
* Aetna Launches New Program to Help Members Achieve Healthy Lifestyles and Health Care Savings
* Wedbush Starts Managed Care Stocks: AGP, HNT, CNC Named Top Picks, HUM, MOH, UAM Rated Outperform, WCG Rated Underperform
* Aetna (AET) Signs Service Contract with Crucial Care’s Southside Facility
* Aetna Signs Agreement with Crucial Care in Jacksonville

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More News related to AGP

* Amerigroup Corporation to Webcast Annual Meeting of Stockholders on May 13
* Wedbush Starts Managed Care Stocks: AGP, HNT, CNC Named Top Picks, HUM, MOH, UAM Rated Outperform, WCG Rated Underperform
* Amerigroup Wins Health Promotion and Disease Awareness Award
* Amerigroup Joins 2010 FORTUNE 500
* IR Global Rankings 2010: Best Ranked Companies in Latin America

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More News related to CI

* Wedbush Starts Managed Care Stocks: AGP, HNT, CNC Named Top Picks, HUM, MOH, UAM Rated Outperform, WCG Rated Underperform
* CIGNA (CI) and Humana (HUM) Form Strategic Alliance to Enhance Service to Employers
* CIGNA and Humana Form Alliance on Retiree Solutions for Employers
* CIGNA and Humana form Alliance on Retiree Solutions for Employers
* Recovery First, Inc is Now In-Network with Cigna for the Treatment of Alcoholism and Drug Addiction

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More News related to New Coverage

* Sandler O'Neill Starts DDR at Buy, CLP at Hold
* RBC Starts HOLX, GPRO at Outperform, BEC, CPHD, QGEN at Underperform
* CapitalOne Initiates Coverage on Exco Resources (XCO) with an Add
* Sidoti & Co Initiates Coverage on Hornbeck Offshore (HOS) with a Buy
* BofA/Merrill Lynch Initiates Coverage on Molina Healthcare (MOH) with a Buy
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