WellPoint a Buy Pre-Earnings - Analyst Blog
WellPoint, Inc. (WLP) is the largest publicly traded commercial health benefits company, in terms of membership in the US. On January 12, 2009, WLP announced that The Centers for Medicare and Medicaid Services (CMS) had suspended the company from enrolling new patients in the health insurance Medicare Advantage plan and the prescription drug benefit, Medicare Part D due to a "sharp" increase in consumer complaints.
We believe the action by CMS is reversible and highlights operational issues that can be addressed by management in the short term. We are presently reviewing our 6-month share price target in light of recent guidance by management however maintain our Buy recommendation at current levels.
WellPoint had been working with CMS to resolve issues identified as a result of internal compliance audits and findings. The decision does not affect current Medicare beneficiaries enrolled in the company's plans. The company also announced it expects to record $349M in net investment losses after taxes for 4Q08. WLP will report 4Q08 financial results on January 28, 2009.
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