Editor's note: Contrary to reporting in a previous version of this article, Coventry Health Care and WellCare Health Plans ended only their private fee-for-service components of Medicare Advantage. The Fool regrets the error.
Every day, the sun rises on Wall Street, and a plethora of professional analysts wake to issue new opinions on stocks. Here at the Fool, we use our "This Just In" column to examine some of these picks -- and the track records of the firms behind them -- so that individuals can make better investing decisions.
In addition to following professional banks, anyone can use Motley Fool CAPS to monitor the collective opinions of more than 135,000 members, many of whom demonstrate better investing insight than published analysts do.
More top-performing CAPS members are feeling bullish about WellCare Health Plans (NYSE: WCG): After being relegated mostly to a four-star ranking for several months, the stock has recently jumped to five-star status. A total of 517 members have given their opinion on WellCare Health Plans, with many of them offering analysis and commentary explaining the recent optimism.
Investors seem relieved Medicaid and Medicare service provider WellCare is set to move forward, now that a $10 million settlement puts an SEC accounting probe behind it. Companies such as Sanofi-Aventis (NYSE: SNY) and Wyeth (NYSE: WYE) have had recent legal setbacks, too, and last year Merck (NYSE: MRK) agreed to shell out about $650 million in Medicaid-related legal issues. WellCare's progress in concluding myriad government investigations has prompted Standard & Poor's to raise its outlook on the company; it's also paying back debts and increasing its financial flexibility.
Still, rising costs of services in Medicare Advantage plans could threaten the margins of insurers such as Humana (NYSE: HUM), Coventry Health Care (NYSE: CVH), and UnitedHealth Group (NYSE: UNH). Like Coventry, WellCare decided to exit the Medicare Advantage private fee-for-service market in 2010. Increasing expenses in the first quarter ate into WellCare's earnings, and membership numbers in the Medicare Advantage program account for only a small percentage of its 2.46 million members anyway. Overall, the company grew revenue by 10% in the first quarter, with Medicaid membership growing 10% year over year. And while significant uncertainty surrounding health-care reform still exists, some investors think reforms could create new Medicaid-eligible patients, providing additional growth opportunities for companies such as WellCare.
To see what the very best CAPS analysts are saying now about WellCare Health Plans -- as well as other winning stocks they are picking -- head on over to CAPS and have a look.
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