NEW YORK (AP) — A Goldman Sachs analyst said shares of Aetna Inc. and Amerigroup Corp. should trade higher after the two managed care providers reported their third-quarter results.
In notes to clients published Sunday, analyst Matthew Borsch added Aetna shares to his Conviction Buy list, a portfolio of stocks with strong recommendations. He said Aetna stock is trading at a discount compared to shares of competitors UnitedHealth Group Inc. and WellPoint Inc.
Borsch also said he is less concerned about profit margins for Medicaid coverage providers like Amerigroup, and he upgraded the stock to "Buy" from "Sell."
Recommended For You
Aetna reported its third-quarter results Wednesday. Borsch said Wall Street was concerned the Hartford, Conn., company would issue a disappointing profit outlook for 2012. Aetna said it expects to earn at least $4.80 per share, and Borsch said that pleased analysts.
Analysts had expected Aetna to earn $4.87 per share, according to FactSet. Since Wednesday, their forecasts have increased, and they now expect $4.94 per share on average.
Borsch already had a "Buy" rating on shares of Aetna. He said prices and medical cost trends will help the company, and health care reform should help Aetna and other insurers.
Aetna shares fell 87 cents to close at $39.76.
Amerigroup reported its third-quarter results Friday, and Borsch raised his price target on the stock to $66 per share from $44. He said Medicaid profit margins could still decrease, but the worst risk for Amerigroup and for competitors like Centene Corp. and Molina Healthcare Inc. seems to be over. He said Medicaid program operators could gain hundreds of billions of dollars in revenue over the coming years as the program expands.
Shares of Amerigroup, which is based in Virginia Beach, Va., rose 4 cents to close at $55.63.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
