“HealthSpring, Inc. (HS) is being upgraded to a Best Buy. The company, which derives most of its revenue from the Medicare Advantage program, delivered solid June-quarter results. Consensus estimates for 2011 and 2012 have moved higher since the report, but the stock has been pressured by selling in the managed-care group and concerns regarding Medicare reform. HealthSpring trades at eight times trailing earnings, below its five-year historical average P/E of 10. The stock also trades at a discount to its historical norms based on price/sales, price/cash flow, and price/book value. HealthSpring is a Best Buy.”
Richard J. Moroney, CFA, Upside, 8/12/11
