NEW YORK (TheStreet) -- Health Net (HNT) stock was downgraded by analysts at Jefferies to "hold" from "buy" with a price target of $75.

This action comes after the health insurer Centene (CNC) - Get Centene Corporation Report announced that it is acquiring Health Net for $6.3 billion in cash and stock, according to the analyst note.

While the acquisition gives Centene significant strategic benefits, the deal is only 7% of Health Net's selling, general and administrative (SG&A) expenses, analysts said.

In Wednesday's early morning trading session, shares are gaining 0.32% to $68.34.

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Health Net provides managed health care services through health plans and government-sponsored managed health plans.

Separately, TheStreet Ratings team rates HEALTH NET INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate HEALTH NET INC (HNT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 12.9%. Since the same quarter one year prior, revenues rose by 28.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.33, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 176.31% to $860.62 million when compared to the same quarter last year. In addition, HEALTH NET INC has also vastly surpassed the industry average cash flow growth rate of 2.17%.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 56.73% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • HEALTH NET INC has improved earnings per share by 5.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HEALTH NET INC reported lower earnings of $1.80 versus $2.12 in the prior year. This year, the market expects an improvement in earnings ($3.30 versus $1.80).
  • You can view the full analysis from the report here: HNT Ratings Report