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Change Healthcare Inc. (CHNG) Vs. Western Midstream Partners LP (WES): Updated Outlook

Change Healthcare Inc. (NASDAQ: CHNG) shares are -16.96% down in the year-to-date (YTD) period and have moved 4.61% or $0.6 higher in the latest trading session. However, stock’s trailing 12-month performance remains nearly +120.23% lower. Comparatively, the stock is -22.54% down YTD and 10.02% over the trailing 3-month period. If we look at the shorter duration, its week performance is 5.30% and 17.84% over the month.

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Analyst Recommendations

On April 13, 2020, SVB Leerink recommended the CHNG stock is a Outperform, while earlier, Citigroup had Initiated the stock as a Buy on July 14, 2020. 21 analysts offering the recommendations for the stock have a consensus rating of 1.70 to suggest that the CHNG stock is a “Strong Buy. 0 of the 21 analysts rate the stock as a “Sell”, while 0 has rated it as “Underweight”. 18 recommend buying, with 1 rating it as an Overweight.

The stock currently trades at $13.61 and analysts tracking its performance over the next 12 months have a consensus estimate price target of $17.22. The consensus price target represents an upside potential 20.96.

Earnings Forecast

Analysts estimate the earnings to increase 66.70% in the current quarter to $0.22, down from the $0.27 reported in the same quarter a year ago. For the current year, earnings should grow to an average of $1.14, down -7.60% from $1.55 reported last year. Analysts also offered guidance for the next financial quarter, with their average projected EPS at between $0.23 and $0.35. Wall Street estimates earnings per share to be at an average of $1.52 for the next year.

Insider Transactions Summary

According to SEC data, total insider shares purchases at the company stands at 0 over the last 12 months, while SEC filings reveal that there have been 0 insider sales over the same period. Insiders have purchases 0 shares while those sold by company executives and officers stand at 0. The last 3 months have seen insiders trade a total of 0 and 0 in purchases and sales respectively.

The EVP & CFO had earlier bought another 100,000 CHNG shares valued at $1.2 million on Jun 10. The shares were bought at $12.00 per share.

Western Midstream Partners LP (NYSE:WES), on the other hand, is trading around $8.97 with a market cap of $4.01B and analyst research firms have a negative stance on its shares. Analysts predict that the stock will reach $11.08 and spell out a more modest performance – a 19.04% return. Some analysts are even forecasting $0.9 per share in earnings this year on a short term (1 year) basis.

Let us briefly look at the Western Midstream Partners LP (WES) financials, with a focus on its operating details as indicated in its earnings report for the last quarter.

Company balance sheet and cash flow

WES’s operating margin was positive on the trailing 12 months basis, remaining steady at 27.20%, while the operating expenses over the recent quarter were at $4.22 million. This represented a 99.37% of the company’s total revenues which amounted $671.75 million. With this in place, we can see that the company’s diluted EPS inclined $0.63 on the year-over-year period, growing to $0.39 as given in the last earnings report.

In terms of the balance sheet & cash flow as of (Sep 2020), the total assets figure advanced to $11.95 billion from $11.91 billion over the previous quarter. The cash flow from operating activities totaled $739.0 million, significantly higher than the $686.53 million reported in the year-ago quarter. The company’s free cash flow for the quarter was $425.93 million.

Insider activity

Insiders have transacted a total of 33 times at Western Midstream Partners LP over the last 6 months, with insider purchases undertaken 19 times and accounting for 472,305 shares. Insider sales totaled 13,758 shares over the same period, with these deals completed in 14 transactions. Looking at these numbers, we realize that net purchases over that period are 5.0 shares. Insiders now hold a total of 243.14M shares after the latest sales, with 0.20% net shares purchased.

Major holders

Insiders own 0.20% of the company shares, while shares held by institutions stand at 37.40% with a share float percentage of 200.83M. Investors are also buoyed by the number of investors in a company, with Western Midstream Partners LP having a total of 230 institutions that hold shares in the company. The top two institutional holders are Alps Advisors Inc. with over 24.57 million shares worth more than $246.71 million. As of Jun 29, 2020, Alps Advisors Inc. held 5.53% of shares outstanding.

The other major institutional holder is Invesco Ltd., with the investment firm holding over 22.93 million shares as of Jun 29, 2020. The firm’s total holdings are worth over $230.18 million and represent 5.16% of shares outstanding.

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