I got a copy of the Feltl Report. It was actually mostly positive, but the analyst thought medical costs are going to go up over the next two years and reduce profits, otherwise many details and many good things to say about MDF.
"the analyst thought medical costs are going to go up over the next two years and reduce profits, otherwise many details and many good things to say about MDF"
So they are saying with a Hold rating that you should not buy any more stock and that it is fair priced - based on some nebulous feeling that medical costs must go up and somehow the company wont pass these costs onto the consumer, insurance companies, or government. So that this stock with a much lower valuation than its peers is a HOLD and that all medical service companies who should be likewise affected by "increasing medical costs" should be a SELL. Notwithstanding the fact that institutional investors have been increasing their positions in this sector (including MDF) qtr/qtr.
I was looking at the Medical expense ratios for the last few years in the report: 2004 = 87%, 2005 = 89.9%, 2006 = 90.1%, 2007 = 86.7%, 2008 = 88.4%, 2009 = 88.5%, 2010 = 82.3%. It seems like this year is way lower than it ever has been, can it really stay this low, or will it move up? Is this year right or are the six years before that? Won't the new rules from health care reform limit increases to the rates the governement pays Humana and are then passed on to MDF? I am going to call the analyst listed on the report tomorrow to see if he is for real or a sham.