An analyst today downgraded Hartford managed care provider Aetna Inc. to “market perform” from “outperform” due to valuation and a challenging growth outlook for the managed care sector.
Aetna may see some near-term benefit due in part to the sale of its pharmacy benefits management business, but Leerink Swann & Co. analyst Jason Gurda said in a research note the company’s shares are close to fair value given longer-term challenges.
He wrote that most investors expect Aetna to sell its pharmacy benefits business, which may be worth $1.5 billion.
Managed care investors and analysts have been worried about the federal government’s push to overhaul the health care system and create new competition for insurers from a government payer.
Gurda said he sees “increased potential” that the reform effort might fail. Even so, he forecasts tough times ahead.
“We believe operating earnings growth in the managed care industry will be a challenge for the next several years due to a tough climate for commercial enrollment growth and the likelihood of increased regulation,” he wrote. (AP)
