Jefferies opens annual health care conference Tuesday

Tuesday's presentations consist mostly of presentations by hospital owners and managed-care companies. Year-to-date, hospital stocks have been a mixed bag, with some companies, such as Kindred Healthcare Inc. and Universal Health Service Inc., each posting about a 20 percent gain, while laggards including MedCath Corp. and LifePoint Hospitals Inc. are down, respectively, 20 percent and 2 percent.

As several analysts have pointed out, the hospital sector is facing challenges as some would-be patients delay procedures amid worries about the economy. That factor, and spending more to recruit new physicians, led Lehman Brothers analyst Adam Feinstein to recently downgrade LifePoint to "Equal Weight" from "Overweight."

Universal Health Services, which is presenting tomorrow, set an all-time high of $65.98 on May 30, prompting Wachovia Capital Markets analyst William Bonello to cut his rating to "Market Perform" from "Outperform" as shares reached a fair price compared with expected future profits.

A slew of managed-care companies, nearly all of which have been slammed since the beginning of the year, will also present Tuesday.

Many companies have already slashed their full-year projections for the year, the latest being Coventry Health Care Inc. last Wednesday. On Friday, Lehman's Joshua Raskin noted Coventry was the first to acknowledge higher medical costs as the reason for its reduction, due to a higher number of outpatient procedures and more money spent on benefits. He added Coventry's large outlook cut does not bode well for the rest of the sector.

Following the cut, several managed-care companies reached multiyear lows, a trend that continued Monday, with Amerigroup Corp., Cigna Corp. and UnitedHealth Group all hitting new lows.

Biotechnology companies take the stage Wednesday. Two biotech heavyweights, Gilead Sciences Inc. and Celgene Corp. with year-to-date returns of, respectively, 19 percent and 29 percent, will make presentations. Overall, the sector has had mixed results so far.

Celgene, whose blockbuster drug Revlimid is approved to treat a blood cancer known as multiple myeloma, released positive data in other blood cancers, such as lymphoma, earlier this month at the American Society of Clinical Oncology annual meeting. That data led Jefferies analyst Eun K. Yang to reaffirm her "Buy" rating on the stock.

However, late Friday, Revlimid's main competition, Millennium Pharmaceuticals' Velcade, won approval as a treatment that could be used in newly diagnosed multiple myeloma patients. Revlimid is approved for patients who have failed a prior therapy.