Wedbush Downgrades Coventry Health Care (CVH) to Underperform; Early Signs of Pricing Cycle Turning - CVH Most at Risk
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Rating Summary:
1 Buy, 14 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
1 Buy, 14 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Wedbush downgraded Coventry Health Care (NYSE: CVH) from Neutral to Underperform, price target lowered from $38 to $32.
Wedbush analyst says, "We are downgrading Coventry based on early signs of the pricing cycle turning and our view of CVH as the company with the most margin compression risk if the cycle turns. We see some early signs that the pricing cycle has started to turn and now expect lower premium yields on commercial books in the near term. Coventry has less favorable positioning to weather a turn in the pricing cycle in our opinion as: 1) Unlike United (NYSE: UNH) and WellPoint (NYSE: WLP) , the company’s local market share is not high enough to pass along price cuts to providers, 2) Coventry pursued a low-price, rebate-minimizing strategy in 2011 that is likely to reduce profits, and 3) Coventry has the highest exposure to states adding (or considering adding) prior approval — the company is likely to face increased rate scrutiny, especially as the pricing cycle turns."
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 $33.67 yesterday.
Wedbush analyst says, "We are downgrading Coventry based on early signs of the pricing cycle turning and our view of CVH as the company with the most margin compression risk if the cycle turns. We see some early signs that the pricing cycle has started to turn and now expect lower premium yields on commercial books in the near term. Coventry has less favorable positioning to weather a turn in the pricing cycle in our opinion as: 1) Unlike United (NYSE: UNH) and WellPoint (NYSE: WLP) , the company’s local market share is not high enough to pass along price cuts to providers, 2) Coventry pursued a low-price, rebate-minimizing strategy in 2011 that is likely to reduce profits, and 3) Coventry has the highest exposure to states adding (or considering adding) prior approval — the company is likely to face increased rate scrutiny, especially as the pricing cycle turns."
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 $33.67 yesterday.
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