UPDATE: Citi Upgrades Bright Health Group (BHG) to Buy
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Citi analyst Ralph Giacobbe upgraded Bright Health Group (NYSE: BHG) from Neutral to Buy, PT $12.00 (from $16.00).
The analyst comments "Bright Health reported a mixed first quarter as a publicly traded company with enrollment above our expectation, but cost running higher. The company attributed the higher cost to COVID, and while mgmt suggested core non-COVID trends inline with expectations, the “adjusted” MLR stat never goes over well. Additionally, a hefty investment gain that was included in adjusted EBITDA helped prop up an otherwise greater drag on profitability. That said, we view the 22% pull-back in the stock as excessive as we consider top-line that showed better, and new market entrance for next year. Moreover, we concede the potential for higher cost in 2H, but we do put credence around favorable non-COVID cost among its HIX membership base, which should limit magnitude of higher aggregate trend, in our opinion. We lower our TP to $12 (from $16) but upgrade the stock to Buy/High Risk (from Neutral/High Risk)."
Shares of Bright Health Group closed at $8.49 yesterday.
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