- CIBC thinks Coventry's (CVH) stock should have been up on Friday, because it beat expectations handily on the strength of a much better than expected commercial MLR, and CVH's quarter displayed none of the pricing or cost issues discussed by Aetna that spooked the market on Thursday.
Pricing exceeded cost trends by 370 basis points this quarter; the huge positive spread should narrow over the rest of the year, but Coventry's guidance is conservative, since it assumes the spread essentially disappears over the next two quarters, and the firm sees no reason why this should occur.
Coventry sounded more optimistic about the competitive environment in Western Pennsylvania than it has in some time, a sharp contrast to Aetna's commentary on other markets. It's easy to make generalizations, but Blue Cross pricing strategies are different in every market.
Firm notes they would have liked to see CVH raise full-year guidance more, since 2Q operating metrics were so strong, but they recognize the company's history of conservative forecasts, and its desire for a few more months of data on the new PDP program, and the sustainability of lower cost trends. Reits Sector Outperformer and $67 tgt.
Notablecalls: Mixed feelings about this one. I think it may bounce but the move won't be big.
Pricing exceeded cost trends by 370 basis points this quarter; the huge positive spread should narrow over the rest of the year, but Coventry's guidance is conservative, since it assumes the spread essentially disappears over the next two quarters, and the firm sees no reason why this should occur.
Coventry sounded more optimistic about the competitive environment in Western Pennsylvania than it has in some time, a sharp contrast to Aetna's commentary on other markets. It's easy to make generalizations, but Blue Cross pricing strategies are different in every market.
Firm notes they would have liked to see CVH raise full-year guidance more, since 2Q operating metrics were so strong, but they recognize the company's history of conservative forecasts, and its desire for a few more months of data on the new PDP program, and the sustainability of lower cost trends. Reits Sector Outperformer and $67 tgt.
Notablecalls: Mixed feelings about this one. I think it may bounce but the move won't be big.
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