3SOF

WCG closed at a new all time high today, at $91.64. The stock seems decided to move towards $100, but probably that won't happen before 1st quarter results are known. The company will release them at May 7:

• WellCare to Release First Quarter 2007 Results on May 7
Business Wire (Mon, Apr 9)

Analysts are already expecting this to be the weakest quarter of the year, so probably there's room for a positive surprise:



In Q4 2006 WCG had EPS of $1.4, and analysts are expecting just $0.54 for Q1 2007. Yes, there's seasonality, but this is too much, and for example, in Q1 2006 EPS was $0.42 compared to $0.27 in Q4 2005.

My valuation model says WCG is still attractive at current levels, expected to return 21.4% a year going forward:



We'll probably get a chance to take profits at the optimal selling price of $105.08 after the Q1 earnings release (unless earnings are so good they'll make me raise my estimates).

I'll keep holding WCG.

 Here is editorial in the NY Times about Medicare subsidies.

Editorial
The Medicare Privatization Scam
     
Published: April 21, 2007

http://www.nytimes.com/2007/04/21/opinion/21sat1.html?th&emc=th

"... When the Democrats first won control of Congress, it seemed possible that they might eliminate the subsidies — saving some $54 billion over five years — to finance a $50 billion expansion of a health insurance program for low-income children. But the insurance industry has mounted a furious lobbying campaign to head off any cuts.

Congress ought to eliminate the subsidies completely unless it is willing to subsidize the same benefits — at enormous cost — for the far greater number of people enrolled in standard Medicare. It is time to level the playing field and force private plans to really compete with traditional Medicare."

I find it a bit strange that we would first have 2 Wall Street Analysts complaining about profits, then three articles (probably more - these are just the ones that popped up) complaining about the the government subsidies of private Medicare providers.

Yes ravenquork, it is interesting how people are saying and writing bearish things about the Health Care Plans industry and WCG keeps on going up to new all time highs with volume above average. When words say down and money says up I always prefer to follow what the money is saying.

I have some hope of being able to revise my long term estimates upward for WCG, but for now my valuation model looks like this:



It says WCG will return 20.84% over the next three years, and that means I shall take profits at the optimal selling price of $105.08 (at that price the stock will start returning less than 16%).

My main hope is that my revenue CAGR estimate is too low, at just 30%, since revenue in 2006 grew 98%. Analysts are expecting just 38.5% revenue growth for 2007, but maybe they're way too conservative. We'll get some more clues to solve this issue when the company reports Q1 2007 results on May 7.

I'll continue holding WCG.

WCG closed at a new all time yesterday. Results will be out on May 7. You can check the valuation model results here (the optimal selling price rose a bit to $105.88 due to a multiple expansion in the Health Care Plans industry average).

I'll continue holding WCG.

WCG had a day of profit taking, as it went down 0.94%. The technical trend remains bullish and fundamentals are attractive. I hope I'll be able to raise my estimates when the company reports Q1 results on May 7.

I'll keep holding WCG.

Time to sell, earnings growth will slow going forward, good short

Quote from: yukiii on April 25, 2007, 06:13:43 PM
Time to sell, earnings growth will slow going forward, good short

yukiii,

It is easy to make pronouncements, but what is your rational?

Quote from: ravenquork on April 25, 2007, 06:58:29 PM

Quote from: yukiii on April 25, 2007, 06:13:43 PM
Time to sell, earnings growth will slow going forward, good short

yukiii,

It is easy to make pronouncements, but what is your rational?

I already said why..........
Time to sell, earnings growth will slow going forward, good short overvalued, But what do i know?

Read between the lines

Quote from: yukiii on April 25, 2007, 07:36:07 PM

Quote from: ravenquork on April 25, 2007, 06:58:29 PM

Quote from: yukiii on April 25, 2007, 06:13:43 PM
Time to sell, earnings growth will slow going forward, good short

yukiii,

It is easy to make pronouncements, but what is your rational?

I already said why..........
Time to sell, earnings growth will slow going forward, good short overvalued, But what do i know?

Read between the lines

No you didn't!! I checked all pages of this thread and the only thing you posted were some updated 'short numbers'.
Every child can say this stock wil go down/up but this isn't a yahoo board! You almost never back up your opinion with some facts or a simple explanation why you see it this or that way! 

Look at there guidance, Growth will slow, I can't state it any easier then that.
It was a nice run up to the $90

Quote from: yukiii on April 26, 2007, 01:39:10 PM
Look at there guidance, Growth will slow, I can't state it any easier then that.
It was a nice run up to the $90

No doubt growth will slow. Revenue growth was 33.5% in 2004, 34.7% in 2005 and 97.9% in 2006. I expect just 30% revenue growth for the next 3 years, so "slower growth" is already factored in my valuation model:



I expect 2% dilution, 30% revenue growth, 5% net profit margin and a 18.47 earnings multiple. Given these estimates, the valuation model tells me I should take profits in WCG at $105.36.

I'll continue holding WCG.

I would adjust earnings growth to 20% next 3 years
3.41 2006  4.00 2007  4.50 2008

Quote from: yukiii on April 26, 2007, 05:59:38 PM
I would adjust earnings growth to 20% next 3 years
3.41 2006  4.00 2007  4.50 2008

The company's internal guidance is superior to your expectations:



And WCG has been beating analysts estimates every quarter:



You can be right, but you can't substantiate your expectations on any trend or public indication. Or can you? Thanks

Quote from: David Randolph on April 26, 2007, 06:24:20 PM

Quote from: yukiii on April 26, 2007, 05:59:38 PM
I would adjust earnings growth to 20% next 3 years
3.41 2006  4.00 2007  4.50 2008

The company's internal guidance is superior to your expectations:



And WCG has been beating analysts estimates every quarter:



You can be right, but you can't substantiate your expectations on any trend or public indication. Or can you? Thanks

I believe you just  substantiate it for me with your figures above. You stated company guidance is 4.17 for 2007  that's less then 20% growth going forward.

I believe this expectation is fully realized at the price of $90 and there are more attractive opportunities for upside elsewhere in the managed care sector.

Organic growth in the Medicaid program is slowing with a lack of market expansion.

QuoteI believe you just  substantiate it for me with your figures above. You stated company guidance is 4.17 for 2007  that's less then 20% growth going forward.

I would read "between $4.10 and $4.20" as $4.15, not $4.17. Since 2006 fully diluted EPS was $3.43, growth would then be 20.99%, to be precise.

QuoteI believe this expectation is fully realized at the price of $90 and there are more attractive opportunities for upside elsewhere in the managed care sector.

Yes, probably there are more attractive opportunities in this sector, since WCG is the least attractive stock in the Main Portfolio. Any suggestions? Thanks.