Jefferies Cuts Price Target on Coventry Health Care (CVH) Due to Poor Full-Year Guidance

Jefferies is maintaining its Hold rating and its lowering its price target by $2 to $35 on shares of Coventry Health Care (NYSE: CVH) following the sell-off on July 29.

The company released its Q2 results with EPS beating the Street by 6 percent, but then released its new full year 2011 EPS guidance, $2.80-$2.95, 4 percent below expectations. Revenue rose 6 percent year-over-year to over $3 billion and beat the Street by 1 percent.

An analyst at Jefferies comments, "Consolidated MLR of 82.4 percent was 30 bps higher than we expected, but 10 bps below consensus. The company lowered its 2011 MLR guidance 15 bps, but this moves the EPS needle much less compared to peer's MLR guidance reductions."

The firm believes that the sell-off does not represent an attractive buying opportunity. Jefferies notes that WellPoint's (NYSE: WLP) 2011 guidance on was also under expectations by 4 percent, resulting in a similar sell-off as shares are currently down ~7.3 percent since closing on July 26.

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 $32.00 yesterday.

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