NEW YORK—A Goldman Sachs analyst said Wednesday that shares of most managed-care companies are trading cheaply and could see an upswing in the near term.
Analyst Michael Borsch said in a note to investors that while managed-care companies will see lower margins in 2009 through 2010, they could benefit from some near-term trends.
Borsch reiterated his "Buy" ratings on Humana Inc. and Cigna Corp., calling the two companies his favorites in the group.
Humana shares closed down $1.09, or more than 2 percent, to $46.75, while Cigna stock declined 45 cents, or 1 percent, to $39.89.
Borsch maintained his "Neutral" rating but lowered his second- through fourth-quarter earnings estimates on Amerigroup Corp. after the company suspended its full-year profit guidance Wednesday, pending the outcome of an ongoing rate dispute with the state of Tennessee.
The company had projected profit between $2.35 and $2.45 per share. Analysts surveyed by Thomson Financial expect profit of $2.44 per share.
Amerigroup shares fell $3.82, or 14 percent, to $23.36.
Among hospital operators, Borsch said presentations indicated that the slowing economy has led to a decline in elective health care procedures. While such procedures are not considered emergencies, a decline in them could hurt hospital revenue. However, he said that AmSurg, operator of outpatient surgery centers, said it has had steady demand.
AmSurg shares fell 52 cents, or 2 percent, closing at $26.21. Among other hospital operators, Community Health Systems Inc. shares shed $1.89, or more than 5 percent and Lifepoint Hospitals Inc. fell $1.46, or nearly 5 percent, to $28.94.
