In a recent report, analysts at Morgan Stanley previewed the first quarter earnings for the managed care industry. The firm expects results broadly in-line with consensus, on average, for most names in the space, except Molina Healthcare, Inc. MOH.
Amongst the diverisfieds, the note says, UnitedHealth Group Inc. UNH seems best positioned to outperform in the first quarter. They report also states that “the sell-side may be slightly mis-modeling Anthem Inc’s ANTM seasonality;” the analysts sit $0.04 above the Street (see estimates below).
The analysts think that Aetna Inc AET has “the toughest Y/Y comp after recognizing $0.45 of favorable benefits including lower flu, lower utilization due to weather, and favorable development in 1Q14.”
Separately, Morgan Stanley likes the panorama for the Medicaid names in the first quarter, “as some of the 2014 pressure areas like HCV and FL costs appeared to have improved in 4Q. That said, Medicaid MCOs did cite potentially higher flu costs in 1Q,” which the firm is watching.
The report highlights 5 key focus areas for the first quarter earnings calls:
1) “The potential for large scale M&A including diversified combinations and diversified/Medicaid deal”
2) “Contingency plans if SCOTUS decision rules against the Administration”
3) Fiscal 2016 “final MA Rate notice and MA cost trend expectations”
4) New demographics and exchange lives
5) “PBM optionality in light of OptumRx/CTRX deal”
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