Jefferies Comments on Metrics at HealthSpring

Jefferies has published a report on HealthSpring HS reviewing the company's position in the market. In the report, Jefferies wrote, "Yesterday was another example of MCO share price movements decoupling from fundamentals. HS had a stellar 2Q (EPS beat by 31%) and raised 2011 EPS guidance midpoint 9% above consensus. Shares should have traded significantly higher, but fell 4.3% and underperformed peers and the market. We still like HS, but don't know when the market will begin to act rationally. Impressive 2Q. HS's strong quarter outperformed on most key metrics. EPS of $1.23 exceeded consensus by 31% driven by better than expected MLR and SG&A. Excluding $0.10 of one-time gains, EPS still beat the Street by 20%. MA membership was in-line while PDP missed our estimate by 1.3%, which is about the only negative we could identify." Jefferies rated HealthSpring a BUY with a price target of $52.00. HealthSpring closed Tuesday at $37.29.