Aetna Inc
Following its revelation of their results for the first quarter, Aetna Inc. has indicated that its whole year projections surpassed the estimates at Wall Street. Shares of Aetna Inc. increased by almost eight percent as the stocks of health insurance firms have reached high levels in recent years.
Aside from Aetna Inc., WellPoint Inc and UnitedHealth Group has also increased their whole year projections during the week. This comes with the implementation of reforms in the healthcare system by the companies including Aetna Inc., which have also begun to give out dividends or increase their payouts.
The current results for companies such as Aetna Inc. give an indication of the cautiousness of Americans in going to the doctor since companies such as Aetna Inc. have lesser medical claims payments. The current modifications in healthcare plans have transferred much of the cost for health-care to the consumers said Tim Nelson of Nuveen Asset Management.
With the improvement of the US economy, more people may utilize medical services although it was not yet evident. According to the chief financial officer of Aetna Inc., Joseph Zubretsky, the current trend started in 2010 and any change may be noticeable toward the later part of the year.
Families USA deputy executive director, Kathleen Stoll, indicated that the low usage of medical insurance may be seen positively if it was due to lesser unessential expenses by healthcare companies such as Aetna Inc., however it will be on the negative side if this was due to cash-saving measures by consumers.
One significant modification in the new law required companies such as Aetna Inc. to reach specific medical care expense thresholds instead of profits and expenses. Even with this requirement Aetna Inc. and other companies still came out stringer.
Despite the increase in shares, investors still indicated that it is still inexpensive as indicated in the $49.10 share price of UnitedHealth which is lower than the target price of the company. The upcoming elections may also affect the stocks of Aetna Inc. and other similar companies since they may be the target during the campaigns in 2012.
The income of Aetna Inc. for the first quarter increased from last year’s $562 million or around $1.28 for every share to around $586 million or around $1.50 for every share this year. A decline in the revenue of Aetna Inc. was observed as the company spent around 79 percent of its premium revenue in medical expenses.
Aetna Inc. has projected earnings for 2011 to reach $4.30 for every share as compared to the February projection of only $3.80 and the analysts’ estimate of $3.75. Aetna Inc. has also indicated that it will acquire the Prodigy Health group for around $600 million.
