Analyst Matt Perry of Wells Fargo has downgraded the managed care sector to hold from buy, citing the likely passage of the Senate healthcare reform bill. Perry maintained buy ratings on Amerigroup, CVS Caremark, HealthSpring, Humana and WellPoint. Notes Perry:
It’s a case of getting bad news before good news. 1) The Senate is likely to pass a bill in the next several weeks that is relatively unchanged from the bill currently being considered. Thus, investors expecting the bill to be watered down or passage to be delayed could be disappointed. This could cause sector valuation to remain at current levels or contract. 2) After the Senate passes its bill we think the final bill could be watered down, scaled back and/or delayed in conference with the House. This is likely to cause managed care cause sector valuations to expand. After the Senate bill passes we could re-visit our current cautious view, all else equal.
Subscribe in RSS Reader
