WedBush Morgan Cuts Price Target On WellCare Health Plans (WCG)

WellCare WCG announced a $137.5 million preliminary settlement related to the qui tam investigations. The settlement equates to approximately 12% of the company's market cap. Wedbush Morgan analysts are estimating that the increased settlement expense will result in negative 2Q10 EPS with a GAAP charge $0.78-$0.80 or $1.28 if the charge is not tax deductible. The analysts wrote that they "continue to view the firm's unfunded shareholder litigation settlement and capital position as a concern." The firm has an Underperform rating on the stock, and slashed their price target from $28 to $26. During the current trading session, WCG has gained 0.45% to $26.75.