WellPoint is a healthy stock choice

Posted Feb 28th 2008 5:05PM by Joseph Lazzaro
Filed under: Stocks to Buy

Readers of this space know that due to uncertainties regarding public policy at the federal level, the health care sector insurance has been avoided. But there are exceptions, and WellPoint is one.

WellPoint, Inc. (NYSE: WLP) is the U.S.'s largest health insurer.

Analysts expect WLP's revenue to increase 4-5% in 2008, driven by premium rate increases and higher enrollments. Enrollments are seen increasing about 2%, with impressive gains in Medicare and Medicaid accounts.

Meanwhile, a company exit from an unprofitable Ohio Medicaid program, and the shift to a fee-based account for Connecticut Medicaid will also help the bottom line.

Overall, medical cost controls are good and analysts also like Wellpoint's effort to diversify its product line. The Reuters FY 2008/FY 2009 EPS consensus estimates for WLP are $6.41 to $7.31.

The risks? Analysts are keeping an eye on WellPoint's enrollment growth rate and guidance for signs of a potential enrollment slowdown.

The First Call mean rating for WLP is: Buy [20 firms]. Mean 2008 target: $96.00 [high: $112, low: $82].

Stock Analysis: WellPoint is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from WLP's shares. Sell/Stop Loss if you were to purchase shares in this company: $47.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Tags: health care, health insurance, Wellpoint, WLP

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Reader Comments (Page 1 of 1)

2-28-2008 @ 6:45PM

HealthcarePal said...

Stop loss at $47?!! I'm afraid if you ride a $73 stock down that far, you don't even need to place a stop. You've become a huge loser already and the stock may be a better "buy" then.

2-28-2008 @ 6:46PM

Miller said...

Stop loss at $47?!! I'm afraid if you ride a $73 stock down that
far, you don't even need to place a stop. You've become a huge loser
already and the stock may be a better "buy" then.
WLP is a steal here near $73. It's also a big holding of Warren Buffet's Berkshire Hathaway.