NEW YORK (AP) -- A Cantor Fitzgerald analyst started coverage of a group of health insurer stocks Wednesday, assigning top ratings to shares of UnitedHealth Group Inc. and Humana Inc.
Analyst Joseph France established "Buy" ratings on UnitedHealth and Humana, and "Hold" rating on shares of Health Net Inc., Aetna Inc., and WellPoint Inc. He said UnitedHealth, the largest health insurer in terms of revenue, "continues to outperform the industry" and should be able to counteract rising medical costs by improving its efficiency and expanding its service business. He said Humana has a large, fast-growing Medicare business and manages medical costs well.
Consumers have cut back on their health care use — like doctors' visits and elective surgeries — while the economy has been weak, and France said he believes health care use has reached a low point and will start to improve. That will raise costs for health insurers, and France said that could be a problem for Aetna. He said the company's profit growth will slow down over the next two years.
France added that WellPoint's results should be better and he wants to see evidence of improved profit growth before considering an upgrade.
The analyst also maintained a "Buy" rating on Coventry Health Care Inc. but cut his price target on the stock to $36 from $38, saying its Medicare Advantage, Medicare Part D, and most of its Medicaid business has improved under new management.
Shares of UnitedHealth lost 66 cents to $59.60 in afternoon trading, and Humana stock declined 19 cents to $79.64. Aetna shares rose 10 cents to $41, WellPoint shares fell 55 cents to $71.33, and shares of Coventry Health Care gained 20 cents to $34.39.