Shares of
Triple-S Management Corp. GTS have rebounded by more than 4 percent on Monday after an almost 20 percent dive on Thursday following a bearish report from Wells Fargo.
In the report, analyst Peter Costa downgraded the Puerto Rico-based insurance company from Market Perform to Underperform, lowering their valuation range from $21-22 to $18-19.
Costa's main concerns stemmed from the U.S. territory's "crumbling economy," which he said have been put under pressure by its mounting debt crisis and "an apparent lack of an immediate solution." According to Costa, an economic slowdown will likely detract from Triple-S's commercial insurance business, well budgetary pressures on the island's government is "likely to result in payment cuts to Medicaid providers and/or reduction in benefit levels."
The analyst said these concerns simply add to the "already substantial headwinds faced by GTS in its Medicare Advantage (MA) business."
Although Costa noted that Triple-S's Q1 earnings supported Wells Fargo's valuation at the time, he remained skeptical that those figures were "indicative of a sustainable trend."
Cate Long, a principle at Puerto Rico Clearinghouse, a research firm focusing on the Commonwealth's municipal debt, told Benzinga that today's 4 percent uptick is simply a reflexive rebound from last week's sell-off.© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
