Aetna needs two years to regain fiscal health, analyst says

Health insurer Aetna Inc. will need two years to bring its profit margins back to their former levels, an Oppenheimer analyst said today in a note to client.
AUG 17, 2009
Health insurer Aetna Inc. will need two years to bring its profit margins back to their former levels, an Oppenheimer analyst said today in a note to client. Analyst Carl McDonald said he spoke with Aetna Chief Financial Officer Joseph Zubretsky on Friday. According to McDonald, Zubretsky said Aetna stands behind its profit guidance for the rest of 2009, but returning to its previous goals will take more time. In July, Aetna said its profit fell 28 percent in the second quarter due to rising medical costs. McDonald said the company priced about 25 percent of its products for 2010 before discovering the trend toward higher costs. Aetna has cut its profit forecast twice since June, and now expects a profit of $2.75 to $2.90 per share. Analysts expect earnings of $2.87 per share on average, according to Thomson Reuters. McDonald said Zubretsky told him Aetna's enrollment won't grow next year, but the CFO believes his company can keep most of its current membership. McDonald said he expects Aetna's enrollment to decrease in 2010, however. The analyst also said Aetna had no new details on a potential sale of its pharmacy benefit management business. McDonald kept an "Outperform" rating and a price target of $32 per share on the Hartford, Conn., company. Aetna shares closed at $28.28 Friday, and have traded between $14.21 and $44.64 over the past 52 weeks.

Latest News

JPMorgan tells fintech firms to start paying for customer data
JPMorgan tells fintech firms to start paying for customer data

The move to charge data aggregators fees totaling hundreds of millions of dollars threatens to upend business models across the industry.

FINRA snapshot shows concentration in largest firms, coastal states
FINRA snapshot shows concentration in largest firms, coastal states

The latest snapshot report reveals large firms overwhelmingly account for branches and registrants as trend of net exits from FINRA continues.

Why advisors to divorcing couples shouldn't bet on who'll stay
Why advisors to divorcing couples shouldn't bet on who'll stay

Siding with the primary contact in a marriage might make sense at first, but having both parties' interests at heart could open a better way forward.

SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives
SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives

With more than $13 billion in assets, American Portfolios Advisors closed last October.

William Blair taps former Raymond James executive to lead investment management business
William Blair taps former Raymond James executive to lead investment management business

Robert D. Kendall brings decades of experience, including roles at DWS Americas and a former investment unit within Morgan Stanley, as he steps into a global leadership position.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.