Jefferies Initiates Buy Rating on HealthSpring (HS)

Jefferies & Company is out with a research report this morning, where it initiates a Buy rating on HealthSpring HS; it has a $35.00 price target on the stock. The analysts cited two key drivers to their rating: 1) "more runway to Reform implementation, and 2) a more open-ended membership growth opportunity." They believe that the market is overly negative on benchmark rates. The analysts also believe that the consensus estimates are too low. The analysts said, “Our $35 12-month price target reflects a 9.6x multiple of 2011 EPS of $3.65. With the addition of the Bravo Health acquisition, we estimate top-line growth of nearly 75% in 2011. Despite its strong run, HS still trades at an industry low multiple. A discount is warranted, but we think the current spread can narrow.”