WellPoint Inc., the nation's second largest health insurer, is providing a more bearish than anticipated forecast for 2013 earnings, according to a Leerink Swann analyst who is lowering his expectations for growth from the insurer's established business for the new year.
THE OPINION: WellPoint Chief Financial Officer Wayne DeVeydt said at a recent conference that he expects the insurer's 2013 earnings to be stable next year, but net income could slip depending on, among other things, investments the insurer makes in its business to prepare for insurance exchanges that will start in 2014 as part of the health care overhaul.
WellPoint, which runs Blue Cross/Blue Shield plans in several states, has had a turbulent summer. In early July, the Indianapolis insurer announced a $4.46 billion acquisition of fellow insurer Amerigroup. Later that month, WellPoint surprised Wall Street by cutting its 2012 forecast and reporting second-quarter earnings that fell more than 8 percent and missed expectations.
Last month, Chairwoman and CEO Angela Braly abruptly resigned, just weeks after WellPoint's board issued a statement expressing support for the company's strategy and management.
Analyst Jason Gurda said in a Wednesday morning research note he lowered his estimate for 2013 earnings before interest and taxes, not counting Amerigroup, to $3.82 billion from $3.9 billion. The new expectation is slightly below his 2012 forecast.
"(WellPoint's) recent commentary leads us to believe that when the company finds a CEO, one of their first tasks may involve resetting investor expectations," he wrote.
THE STOCK: WellPoint shares climbed 21 cents to $59.12 in Wednesday morning trading, while the Standard & Poor's 500 index also rose less than 1 percent.