A BMO Capital Markets analyst upgraded shares of Health Net Inc. Tuesday, saying he thinks the health insurer will regain at least part of the defense department business it lost last year to Hartford’s Aetna Inc.
Dave Shove raised his rating to “market perform” from “underperform,” saying Health Net could regain billions in business with the Pentagon’s Tricare program or win a new contract. He said the Woodland Hills, Calif., company should get a decision on its appeal of the Tricare contract award by June 1.
The Tricare program provides insurance for military members and their families. In July, the Pentagon decided not to renew a contract with Health Net, awarding coverage of its Northern members to Aetna instead. The contract could be worth up to $16.68 billion over five years if all options are exercised. Health Net is appealing the decision.
Shove said he expects a successful appeal.
“After discussing the grounds of the protest and mechanics behind the award process, we have reason to believe those 2.8 million lives will remain with Health Net coverage — at least through 2011,” he said. Shove added that the government accountability office supported Health Net’s protest. (AP)
