CHICAGO, April 4, 2012 /PRNewswire/ -- Zacks.com 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 The Dow Chemical Company (NYSE: DOW), WellPoint Inc. (NYSE: WLP), Aetna Inc. (NYSE: AET), CIGNA Corporation (NYSE: CI) and UnitedHealth Group Inc. (NYSE: UNH).
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Here are highlights from Tuesday's Analyst Blog:
Dow to Cut Costs, Lay Off 900
The Dow Chemical Company (NYSE: DOW) announced that it will be cutting costs owing to weak demand of its products in Europe. As part of the move, the company has announced the closure of its manufacturing plants in Europe, North America and Latin America.
In addition, Dow plans to shut down three plants that produce Stryofoam Brand Insulation products. These plants are located in Estarreja, Portugal; Balatonfuzfo, Hungary; and Charleston, Illinois. The shutdown plans, which are expected to complete within a period of two years, will also include the idling of a Netherlands operation and the closing of a factory in Brazil.
Separately, Dow expects to lay off 900 workers as part of its previously announced cost-reduction efforts and its "Efficiency for Growth" program initiated in 2011. The company also anticipates saving approximately $250 million annually from these actions. As part of this initiative, the company expects restructuring charges and write-downs of about $350 million to be incurred during the first quarter of 2012.
The company announced, in February 2012, its fourth-quarter 2011 results. Its revenues and earnings for the quarter missed the Zacks Consensus Estimates.
Dow did not forecast much improvement in market conditions for the first quarter of 2012. However, the company projected economic recovery to gain momentum into the second quarter and the remainder of the year. Dow expects to meet its short and long-term targets irrespective of the economic conditions.
S&P Raises WellPoint's Outlook
On Monday, credit rating agency Standard and Poor's (S&P) Rating Services raised its outlook on WellPoint Inc. (NYSE: WLP) to 'Positive' from 'Stable.' The rating agency also affirmed the company's counterparty credit rating (CCR) for senior unsecured notes at 'A-' and commercial paper at 'A-2.'
Additionally, S&P affirmed the CCR and financial strength ratings (FSR) of UNICARE Life & Health Insurance Co., a subsidiary of WellPoint, at 'BBB' with a stable outlook. The agency has retained the CCR and FSR of the company's other subsidiaries at 'A+' and raised their outlook to positive from stable. The umbrella company has a lower CCR than its subsidiaries as the company faces higher regulatory constraints and relies on the dividends from its subsidiaries for its interest obligations.
The ratings affirmation and outlook revisions stemmed from WellPoint's operating efficiency, wide product portfolio, large operating scale and strong cash flows, which generate ample liquidity, thereby providing financial flexibility. Moreover, the company's capitalization level comfortably surpasses the requisite regulatory level.
Additionally, S&P believes that WellPoint will be able to easily maintain and even expand its market share. The revenues are also expected to grow at a comfortable pace, while the health care reform-related risks are on the decline. The impressive fundamentals of the company could lead to an upward rating revision.
On the flip side, if WellPoint's adjusted debt leverage surpasses 35%, the earnings before interest, taxes, depreciation and amortization (EBITDA) coverage sinks below 8 or operating margin stays below 6% for a continued period, then a downward revision of the outlook can be expected.
WellPoint is the largest insurer on the basis of enrollment, beating competitors likeAetna Inc. (NYSE: AET), CIGNA Corporation (NYSE: CI) and UnitedHealth Group Inc. (NYSE: UNH). Currently, the Zacks Consensus Estimate for the company's first quarter earnings stands at $2.28 per share, an estimated year over year decline of roughly 2.8%. For 2012, earnings are projected to be $7.65 per share, representing an estimated year over year surge of nearly 9.3%.
Currently, WellPoint carries a Zacks #4 Rank, which translates into a short-term 'Sell' rating. Considering the fundamentals, we maintain a long-term Neutral recommendation on the stock.
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