Sector Wrap: Managed care down on Coventry earnings

Citi Investment Research analyst Charles Boorady cut price targets on several insurers, including Coventry, Health Net, Humana and Unitedhealth in the wake of Coventry's announcement. He said many managed care organizations have seen higher medical costs, though he sees a possible positive turn in underwriting next year.

Oppenheimer & Co. analyst Carl McDonald noted that five of the seven largest managed care companies have reduced guidance in the last three months. He said an acceleration in cost trends is not confirmed by industry data. He cut his Coventry price target to $50 from $61, but maintained a "Neutral" rating on the shares.

During the session, Coventry traded as low as $30.10, its lowest point since November 2004, before regaining a portion of its losses to close down $8.70, or 21.8 percent, $31.30.

Joining Coventry in hitting new lows were Amerigroup Corp. hitting a two-year low of $21.78, before closing at $22.15, down $1.32, or 5.6 percent.

Unitedhealth Group Inc. bottomed out at $26.93, its lowest trade since December 2003, before closing down $2.23, or 7.7 percent, at $27.89.

Cigna Corp. reached a nearly two-year low of $36.25 during the session, and closed down $2.76, or 7 percent, at $36.94.

Health Net Inc. hit $24.76, their lowest point since November 2004, before recovering slightly to close down $1.82, or 6.4 percent, at $26.73.

Meanwhile, Aetna Inc. and Humana Inc. sought to quell fears by reaffirming their second-quarter and full-year profit projections.

Aetna closed down 75 cents at $41.85, while Humana lost $1.69, or 3.8 percent, to close at 442.75.