When managed-care provider WellCare Health Plans (NYSE:WCG) announced its Q1 earnings in May, I came down a bit hard on analysts who had downgraded the stock in recent quarters. Jefferies & Co. was one of those analysts. So with Jefferies & Co. now upgrading the stock to "hold" from "underperform," I thought I would at least give credit where credit is due. The stock has appreciated about 14% since the "underperform" rating was issued at the end of April.

Clearly, it's much easier for me to play Monday morning quarterback than it is to make the actual calls. Some signs could have been the basis for a downgrade, such as multiple top executives of WellCare selling shares in April and again in June. Valuation concerns are also reasonable, given the stock's unhindered 82% run-up in price over the past 52 weeks. And in June, WellCare, along with six other insurers -- including UnitedHealth Group (NYSE:UNH), Humana (NYSE:HUM), and Coventry Health Care (NYSE:CVH) -- agreed to temporarily stop promoting their private fee-for-service plans until Medicare officials have certified that the plans are being promoted fairly.

That said, WellCare has consistently been churning out quarterly earnings that far surpass those of the year-ago quarter -- its 49% year-over-year increase in Q1 net income is a prime example. I can't remember the last time that I read the "guidance" section of its earnings release when it hasn't opened with the phrase, "The company is raising its previously issued guidance of ..."

The company is set to report its Q2 results on Aug. 2, when we'll see if this impressive streak of earnings growth continues, and by how much. In the meantime, I wouldn't want to maintain a short position in this stock -- at least, not until the company's earnings numbers begin to indicate otherwise. I definitely believe the Jefferies & Co. upgrade was the proper course today, and the next few quarters will prove whether I'm right.  

UnitedHealth is recommended in both Inside Value and Stock Advisor, and Coventry is a Stock Advisor selection. What other health-care stocks have been recommended in Tom and David Gardner's newsletter? Take a free trial of Stock Advisor to see how their picks are beating the market by 38 percentage points.

Fool contributor Billy Fisher does not own shares of any of the companies mentioned. The Fool has a disclosure policy.