Deutsche Bank Reaffirms a 'Buy' on WellPoint (WLP); Raises PT & Estimates

November 24, 2009 7:15 AM EST

Deutsche Bank reaffirms a 'Buy' rating on WellPoint (NYSE: WLP), price target increased from $58 to $62.
Deutsche analyst says, "We visited with WLP's management team in Los Angeles on 11/19. While WLP expects operating earnings to decline in 2010, the CFO is targeting EPS growth next year due to share buybacks. WLP's CFO is also hopeful operating earnings growth should accelerate in 2011. Relative to 4Q09, WLP's claims data has shown some abatement in H1N1 related cost pressures over the past three weeks. Separately, WLP still views the health reform bill as deeply flawed legislation. Reaffirm Buy rating as WLP remains our top pick in managed care...WLP’s claims data is showing some abatement in H1N1 related costs over the past three weeks; this could have positive implications for medical costs in 4Q09 and we are raising our 4Q EPS est. to $1.07 from $1.04 to assume a slightly better MLR. WLP’s CFO confirmed that the company is targeting EPS growth in 2010 although operating earnings are expected to decline. WLP sees the potential for stronger earnings growth in 2011 as the economy improves and certain transitory cost pressures (such as H1N1 and COBRA) return to more normalized levels. However, WLP continues to view the health reform legislation as likely being highly disruptive to the private marketplace, particularly in the ISG segment...Increase 2009 EPS to $5.98 (from $5.94)."

To see all the upgrades/downgrades on shares of WLP, visit our Analyst Ratings page.

WellPoint, Inc. (WellPoint) is a health benefits company serving 35 million medical members, as of December 31, 2008.

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