Deutsche Bank Downgrades WellPoint (WLP) to Hold

January 3, 2013 9:14 AM EST
Get Alerts WLP Hot Sheet
Price: $128.71 --0%

Rating Summary:
    7 Buy, 13 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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Deutsche Bank downgraded WellPoint (NYSE: WLP) from Buy to Hold with a price target of $68.00 (from $72.00).

The firm comments, "In conjunction with our downgrade of our managed care sector view to neutral and an assumption of a more cautious tone on Commercial Risk margins in 2013, we are downgrading our rating on WellPoint to Hold from Buy. To be clear, WellPoint’s fully insured pricing data was stronger than most of its peers in our 2013 survey so the company appears to be maintaining pricing discipline in its Commercial business. However, we would note that WellPoint's pricing data was also stronger than most peers in our 2012 survey yet the company underperformed the group from both an earnings execution and stock price performance perspective. Similar to UNH, we believe WLP shares show the promise for significant long-term price appreciation given the stock’s current highly discounted valuation and largely unhindered free cash flow generation capacity. Moreover, the shares underperformed the group in 2012 which means the stock could see some catch up in 2013. Finally, the closing of the AmeriGroup acquisition will provide the company with a leading Medicaid platform along with enhanced capabilities to manage the conversion of dual eligibles tomanaged care."

For an analyst ratings summary and ratings history on WellPoint click here. For more ratings news on WellPoint click here.

Shares of WellPoint closed at $60.92 yesterday.

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