Story updated at 9:50 a.m. to reflect market activity.
Shares of WellCare fell -1.6% to $61.19 in morning trading.
The analyst firm set a price target of $65 for the company. A near-term takeover is less likely, and WellCare will likely struggle to grow margins according to Wedbush analysts.Must read: Warren Buffett's 25 Favorite Stocks EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he and Stephanie Link think could be potentially HUGE winners. Click here to see the holdings for FREE. ----------------- Separately, TheStreet Ratings team rates WELLCARE HEALTH PLANS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation: "We rate WELLCARE HEALTH PLANS INC (WCG) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 20.9%. Since the same quarter one year prior, revenues rose by 35.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, WCG has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
- The share price of WELLCARE HEALTH PLANS INC has not done very well: it is down 6.18% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- WELLCARE HEALTH PLANS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, WELLCARE HEALTH PLANS INC reported lower earnings of $3.98 versus $4.22 in the prior year. For the next year, the market is expecting a contraction of 46.0% in earnings ($2.15 versus $3.98).
- You can view the full analysis from the report here: WCG Ratings Report