Zacks Investment Research downgraded shares of WellPoint Inc. (WLP) from OUTPERFORM to NEUTRAL on September 24, 2013, with a target price of $87.00.
We are downgrading our recommendation on WellPoint to Neutral based on higher expenses and a reduced revenue guidance for 2013, which is expected to pull down margins in the upcoming period. However, the company reported strong second-quarter earnings that surpassed the Zacks Consensus Estimate as well as the year-ago results on the back of higher revenues and membership. Reduced long-term debt along with increased shareholder equity and asset balance strengthened the balance sheet. Also a leading market position, diversified product portfolio, efficient capital management and strategic acquisitions poise the company for long term growth. However, reduced cash flow and deteriorating debt leverage and benefit expense ratio keeps us concerned.
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