Aetna maintains 2008 profit outlook below consensus estimate
Aetna shares closed at $42.65, down $3.86, or more than 8 percent. Earlier in the day, Aetna shares fell by more than 12 percent.
Health care was the only sector seeing major losses on Wall Street Tuesday as stocks overall rebounded sharply following news that the Federal Reserve and other central banks said they will pump $200 billion into the financial markets to help ease the credit crisis.
Shares of WellPoint Inc. fell after Goldman Sachs trimmed its ratings in the managed care sector to neutral from attractive. The investment bank singled out WellPoint's performance amid pricing pressures.
Aetna is maintaining its full-year earnings forecast at $4 per share on medical membership growth between 800,000 and 850,000. Its first-quarter adjusted profit outlook remains 92 cents per share.
Analysts surveyed by Thomson Financial expect slightly higher 2008 net income of $4.04 per share and quarterly earnings of 97 cents per share.
John Rex of Bear Stearns anticipated that the troubled health care stocks could let up on Friday when Aetna has scheduled an investor analyst conference in New York.
"Perhaps Aetna can ease some of today's sell-off a bit with Friday investor day?" he asked.
"Company commentary has generally biased toward a still favorable cost trend environment for Aetna and continuation of this posture could provide some help for the broader group," Rex said.
Aetna told analysts in January that the managed care company expects between 800,000 and 850,000 new members in its medical insurance business in 2008, with 550,000 to 600,000 members in the first quarter.
Bridget Maehr, a financial analyst at A.M. Best in Oldwick, N.J., said that as a result, Aetna "had a good picture right away."
However, many of Aetna's new members are large employers that are self-insured, which is a less-profitable and lower-margin business.
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