WellPoint (WLP), the largest health benefits company in the U.S., grew even larger last week with the completion of its purchase of WellChoice. The closing of the $6.5-billion deal, which was announced last September, makes shares of the managed-care giant even more attractive for the coming year, says Standard Poor's analyst Phillip Seligman.
Seligman, who already liked the long-term earnings prospects for the company, reiterated his "strong buy" recommendation for the stock following the announcement on December 28. The stock is highlighted in the January 4 issue of SP's Outlook newsletter.
WellPoint, which itself was formed by a merger between Anthem and WellPoint Health Networks in late 2004, serves 34 million medical members, including the 5 million it has gained from WellChoice. It provides health insurance under the Blue Cross/Blue Shield brand in several states. That well-known name is an advantage for attracting new members, Seligman says, considering its "long-standing reputation for high quality service."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
WellChoice was the last remaining publicly traded Blue licensee, besides WellPoint. Its strong presence in the Northeast should be a boon for WellPoint's national accounts business, Seligman says.
WellPoint competes against such companies as UnitedHealth Group and Aetna. SP gives all three stocks its highest five-star rating.
Seligman says the purchase likely won't affect WellPoint's earnings this year. However, he sees the deal adding 5 cents a share to the company's 2007 profits, which he now estimates at $5.35 per share.
The stock made strong gains in 2005, climbing 39% for the year. At $79, the stock trades at 17 times the 2006 consensus earnings estimate of $4.58 per share. Analysts expect earnings to grow 15% annually over the next five years.
--Lisa Dixon
-
What the Comcast Cable Spinoff Means for InvestorsComcast has announced plans to spin off select cable networks and digital assets into a separate publicly traded company. Here's what you need to know.
-
TJX Stock: Wall Street Stays Bullish After EarningsTJX stock is trading lower Wednesday despite the TJ Maxx owner's beat-and-raise quarter, but analysts aren't worried. Here's why.
-
Why Is Warren Buffett Selling So Much Stock?Berkshire Hathaway is dumping equities, hoarding cash and making market participants nervous.
-
Fed Cuts Rates Again: What the Experts Are SayingFederal Reserve The central bank continued to ease, but a new administration in Washington clouds the outlook for future policy moves.
-
If You'd Put $1,000 Into Google Stock 20 Years Ago, Here's What You'd Have TodayGoogle parent Alphabet has been a market-beating machine for ages.
-
Fed Goes Big With First Rate Cut: What the Experts Are Saying
Federal Reserve A slowing labor market prompted the Fed to start with a jumbo-sized reduction to borrowing costs.
-
Stock Market Today: Stocks Retreat Ahead of Nvidia EarningsMarkets lost ground on light volume Wednesday as traders keyed on AI bellwether Nvidia earnings after the close.
-
Stock Market Today: Stocks Edge Higher With Nvidia Earnings in FocusNvidia stock gained ground ahead of tomorrow's after-the-close earnings event, while Super Micro Computer got hit by a short seller report.
-
Stock Market Today: Dow Hits New Record Closing HighThe Nasdaq Composite and S&P 500 finished in the red as semiconductor stocks struggled.
-
Stock Market Today: Stocks Pop After Powell's Jackson Hole SpeechFed Chair Powell's Jackson Hole speech struck a dovish tone which sent stocks soaring Friday.
