Standpoint Research Downgrades Coventry Health Care (CVH) to Hold; Valuation Call

Standpoint Research downgraded Coventry Health Care (NYSE: CVH) from Buy to Hold.

Standpoint analyst, Ronnie Moas, said, "The shares are now trading 10% above where they were before the slide in late April. CVH is now trading at > 9X peak earnings from 2007, 12.5X estimates for 2011 and 11.5X estimates for 2012. The risk-reward is no longer favorable with Relative Strength at CVH showing 94/100...RS > 90 is usually a sign that the market is over-reacting to good news and not factoring in the risks and downside sufficiently. I rarely if ever hold positions with RS > 90. There has been insider selling at CVH. Although good news is expected when the company reports Q2, that news is already priced in given the recent run with the shares up 100% trailing twelve months and 40% year-to-date. Rising expenses and regulatory issues remain a concern. This is not an easy call to make as CVH shares remain attractive on some absolute and relative valuation measures."

For more ratings news on Coventry Health Care click here and for the rating history of Coventry Health Care click here.

Shares of Coventry Health Care closed at $37.54 yesterday.

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