) shares gained ground after the company reported second-quarter EPS of $0.60, vs. $0.30 a year ago, on a 13% rise in operating revenues.
Bear Stearns upgraded the stock to attractive from neutral on the news. Analyst John Rex says the company's EPS levels appear sustainable and the stock valuation is attractive. He notes EPS was $0.13 higher than his estimate and $0.12 above the consensus forecast, driven almost entirely by a much improved medical cost ratio vs. expectations. He notes operating revenue increased 13% year-over-year on acquisition-related membership growth and strong pricing trends.
He preliminarily boosts $1.95 2002 EPS estimate to $2.31, and his $2.25 2003 forecast to $2.65, primarily on major improvement in medical cost ratio vs. his prior outlook. He set a $32 price target.