Dougherty & Co Downgrades Healthways (HWAY) to Neutral, Cuts Price Target on Cigna (CI) News
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Price: $38.05 --0%
Rating Summary:
8 Buy, 4 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 16 | New: 19
Rating Summary:
8 Buy, 4 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 16 | New: 19
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Dougherty & Co downgraded shares of Healthways (NASDAQ: HWAY) to a Neutral rating from its previous rating of Buy and reduced its price target from $20 to $12.
The company reported solid third quarter results yesterday with as adjusted EPS totaled $0.28, well above the firm's estimate of $0.21. Management confirmed speculation that Cigna (NYSE: CI) will begin partnering with HWAY less beginning in 2012. Cigna is currently HWAY's largest customer.
The firm forecasts the loss of Cigna will negatively impact sales by roughly $60-$65 million in 2012 and earnings by $0.30-$0.40. Management noted sales would be impacted by $50-$60 million for 2013 as earnings will be impacted negatively by $0.10-$0.20.
An analyst at Dougherty comments, "We believe the figures highlighted above related to the potential impact of the loss of the CI relationship reflect something of a worst case scenario. However, we have removed $60 million of revenue and $0.40 from our 2012 EPS forecast as noted above the table at the top of this note. We did not have a forecast for 2013. Thus, as we constructed one today, we were mindful of the expected loss of an additional $50-$60 million of revenue and an additional $0.10 or more of adjusted EPS."
For 2011, the firm now forecasts EPS of $0.95 with $691 million in sales. For 2012, earnings is estimated to be $0.78 per share on $673.5 million in sales.
For more ratings news on Healthways click here and for the rating history of Healthways click here.
Shares of Healthways closed at $11.17 yesterday.
The company reported solid third quarter results yesterday with as adjusted EPS totaled $0.28, well above the firm's estimate of $0.21. Management confirmed speculation that Cigna (NYSE: CI) will begin partnering with HWAY less beginning in 2012. Cigna is currently HWAY's largest customer.
The firm forecasts the loss of Cigna will negatively impact sales by roughly $60-$65 million in 2012 and earnings by $0.30-$0.40. Management noted sales would be impacted by $50-$60 million for 2013 as earnings will be impacted negatively by $0.10-$0.20.
An analyst at Dougherty comments, "We believe the figures highlighted above related to the potential impact of the loss of the CI relationship reflect something of a worst case scenario. However, we have removed $60 million of revenue and $0.40 from our 2012 EPS forecast as noted above the table at the top of this note. We did not have a forecast for 2013. Thus, as we constructed one today, we were mindful of the expected loss of an additional $50-$60 million of revenue and an additional $0.10 or more of adjusted EPS."
For 2011, the firm now forecasts EPS of $0.95 with $691 million in sales. For 2012, earnings is estimated to be $0.78 per share on $673.5 million in sales.
For more ratings news on Healthways click here and for the rating history of Healthways click here.
Shares of Healthways closed at $11.17 yesterday.
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