Analysts Bail on WellPoint After Guidance Cut (WLP, UNH, AET)

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WellPoint (NYSE: WLP) lowered guidance last night and put 2008 EPS targets at a new range of $5.76 to $6.01 EPS from an original $6.41 estimates.  It also put revenues at $62 Billion, yet First Call estimates were $63.5 Billion.  The company cited medical costs running above plan, lower than expected fully covered insurance enrollment, and the overall slowing economic environment.

What is interesting here is that analysts have abandoned the health benefits company.  It seems maybe insurers aren’t going to be immune from the economic downturn after all.  So far we have seen several downgrades and negative calls, and you can imagine that with 3 hours to the open there will be more downgrades or at least lowered targets from more firms.  Here are the downgrades seen so far:

  • cut to Peer Perform at Bear Stearns;
  • cut to Neutral at Goldman Sachs;
  • cut to Neutral at JPMorgan.

Aetna (NYSE: AET)just reiterated its prior quarterly and annual guidance targets after WellPoint dropped the bomb.  Aetna shares are still indicated lower by almost 5% to $43.00 after a $46.51 close yesterday.  Its 52-week trading range is $39.02 to $60.00.

UnitedHealth (NYSE: UNH) has so far not issued any statement nor revised any targets, yet its shares are indicated down 5% or more in pre-market trading around $42.00.  It closed at $45.07 yesterday, and its 52-week trading range is $44.00 to $59.46.

WellPoint shares are indicated down under $55.00 this morning, which would be close to a 16% drop.  Its 52-week high is $90.00 and analysts had a $96 target before the ball got dropped after the close yesterday.  More cuts are coming.

Jon C. Ogg
March 11, 2008