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The Zacks Analyst Blog Highlights: CIGNA, UnitedHealth, Wellpoint, Aetna and Ulta Salon, Cosmetics & Fragrance

Thursday, June 09, 2011

The Zacks Analyst Blog Highlights: CIGNA, UnitedHealth, Wellpoint, Aetna and Ulta Salon, Cosmetics & Fragrance09:30 EDT Thursday, June 09, 2011CHICAGO, June 9, 2011 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: CIGNA Corp. (NYSE: CI), UnitedHealth Corp. (NYSE: UNH), Wellpoint Inc. (NYSE: WLP), Aetna Inc. (NYSE: AET) and Ulta Salon, Cosmetics & Fragrance Inc. (Nasdaq: ULTA).(Logo: the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: are highlights from Wednesday's Analyst Blog: CIGNA Upgraded to OutperformWe are upgrading our recommendation on the shares of CIGNA Corp. (NYSE: CI) to Outperform from Neutral following an upward revision in its guidance post first quarter results.Philadelphia-based CIGNA's first quarter consolidated revenues grew to $5.4 billion marking an 8% hike over the first quarter of 2010, after excluding the impact of its planned exit from the individual Medicare Private Fee-for-Service business. The upside reflects solid growth in each of CIGNA'a targeted market segments.CIGNA's first quarter consolidated earnings stood at $375 million, representing a 33% improvement from the comparable period last year. Consequently, the quarter recorded earnings per share of $1.37, reflecting a 36% increase compared with the year-ago quarter. The earnings upside mainly resulted from a strong globally diversified portfolio of businesses and solid execution of the company's growth strategy.In Health Care, first quarter 2011 premiums and fees grew 6% sequentially, excluding the impact of the exited business. This reflects continued membership growth in the company's targeted customer segments and increased specialty penetration. The first quarter earnings for Health Care were $246 million, including the impact of favorable prior claim development and sustained growth.As part of its long-term strategy, CIGNA continues to focus on improving its operating expenses through a combination of expense efficiencies and business growth. For the first quarter of 2011, medical operating expenses were slightly down compared with the year-earlier quarter.CIGNA's International segment also continued to deliver attractive growth and strong margins. Premiums and fees grew 32% quarter-over-quarter, driven by strong customer retention and solid new sales within the health, life and accident and expatriate benefits businesses, including contributions from Vanbreda International. This top-line growth drove strong earnings of $77 million during the quarter. Management expects full-year earnings from International in the range of $275 million to $295 million, marking a $15 million increase over its previous guidance.On the basis of its commendable first quarter results, CIGNA now expects full-year 2011 consolidated adjusted income from operations to range between $1.275 billion and $1.365 billion. This revised range is $75 million to $85 million higher than its previous expectations and reflects an increase in outlook for each of its ongoing businesses. Management now anticipates full-year earnings per share (EPS) in the range of $4.65 to $5.00, which is an improvement of 30 cents to 35 cents per share over its previous EPS forecast.Further, CIGNA expects Health Care earnings in the range of $860 million to $900 million, which is an improvement of $40 million to $60 million from earlier guidance range. This improvement reflects a favorable prior-year claim development recognized in the first quarter and continued effective execution of its growth strategy. The company remains on track to deliver a full-year total Health Care operating expense ratio of 26.5% to 27% and medical operating expenses of $235 to $240 per member per year, with continuous investments in technology and service capabilities to support ongoing growth.With respect to medical membership, CIGNA expects full-year 2011 membership growth of 1% to 3%, excluding the planned non-strategic market exits.CIGNA, which competes with UnitedHealth Corp. (NYSE: UNH), Wellpoint Inc. (NYSE: WLP), and Aetna Inc. (NYSE: AET), continues to have a strong balance sheet and good financial flexibility. Its subsidiaries are generating significant free cash flow, which reflects a strong return on capital in each of its ongoing businesses. CIGNA ended the quarter with cash and short-term investments of $790 million. During the first quarter, the company repurchased 3.9 million shares of CIGNA's common stock and subsequently repurchased an additional 1 million shares through May 4. Till date, CIGNA has repurchased 4.9 million shares of the stock for approximately $210 million.After considering subsidiary dividends, pension contributions and other sources and uses, CIGNA expects to have about $1.1 billion available for capital deployment in order to deliver sustainable value for the benefit of customers and shareholders in 2011. CIGNA would prioritize its capital mainly in three ways. Firstly, it would deploy the capital in order to grow its ongoing operations, and fund its pension plan and Run-off Reinsurance business. Secondly, it would consider mergers and acquisitions, with the focus on acquiring capabilities in scale; and finally, it would return capital to investors, primarily through share repurchase.Ulta Salon Tops on Strong TrafficUlta Salon, Cosmetics & Fragrance Inc. (Nasdaq: ULTA) posted first quarter 2011 earnings of 37 cents per share, which surpassed the Zacks Consensus Estimate of 31 cents. Quarterly earnings shot up 60.9% from the year-ago quarter earnings of 23 cents per share and also beat management's guided range of 29 cents to 31 cents.The better-than-expected results were due to double-digit growth in the top line resulting from robust guest count.Quarter HighlightNet sales in the quarter increased 20.6% year over year to $386.0 million and were also above the Zacks Consensus Estimate of $371.0 million. The increase was driven by a rise in comparable store sales, which escalated 11.1% from 10.8% reported in the prior-year quarter. The company also benefited from unit expansion.According to management, the enhancement was spread across all major categories and generated this marked improvement in results, amid a sluggish economic recovery, based on dynamic marketing initiatives and  brands strategies implemented in 2009.Gross margin expanded 230 basis points (bps) year over year to 34.9% in the first quarter, mainly attributable to cost reductions through improved supply chain and marketing leverage.Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: Zacks Equity ResearchZacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: Zacks is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at for information about the performance numbers displayed in this press release.Follow us on Twitter: us on Facebook: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.Media ContactZacks Investment Research800-767-3771 ext. http://www.zacks.comSOURCE Zacks Investment Research, Inc.