UPDATE: Citigroup Initiates Healthways at Sell; EPS Expectations Are Optimistic
Citigroup initiated coverage on Healthways (NASDAQ: HWAY) with a Sell rating and a $9 price target.
Citigroup noted, "Consensus expects Healthways to earn $0.72 per share in 2014, more than double what the company is expected to earn in 2013. The view is based on the assumption that Healthways can improve margins by over 200 basis points. We think contract losses, lower margins on new business, and less favorable rates on renewed contracts will pressure margins relative to the consensus view. Moreover, investment spend could accelerate ahead of healthcare reform, limiting upside."
Healthways closed at $10.81 on Monday.
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