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Non-Tech : Aetna, Inc. (AET)
AET 212.70+0.3%Nov 28 4:00 PM EST

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From: JakeStraw4/25/2006 3:40:05 PM
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Earnings Preview: Aetna
Tuesday April 25, 3:32 pm ET
biz.yahoo.com

Aetna to Report 1Q Earnings, Analysts See 63 Cents a Share

HARTFORD, Conn. (AP) -- Aetna Inc. reports first-quarter earnings on Thursday. Following is a summary of key developments and analyst commentary related to the quarter.

OVERVIEW: Shares of health maintenance organizations have taken an unexplained beating in the past two months, with Aetna dropping 11.5 percent despite a dearth of market-moving news.

Analysts are puzzled as to the unexplained drop, pointing to basically good fundamentals.

One major development during the quarter was the debate over universal health care coverage in Massachusetts. The state enacted a law this month that will use financial incentives and penalties in an effort to expand coverage to virtually every citizen. Analysts are mixed as to what effect universal coverage will have in Massachusetts and in any other states that may follow suit. Aetna said it supports the law.

In January, Aetna announced that company President Ronald A. Williams will replace outgoing Chief Executive John W. Rowe who will retire by the end of the year.

BY THE NUMBERS: Analysts polled by Thomson Financial forecast net income of 63 cents per share for the first quarter. Aetna earnings were $1.39 a share in the first quarter of 2005. The company issued earnings guidance in a range of $5.57 to $5.63 per share for all of 2006.

ANALYST TAKE: Prudential analyst David Shove rates Aetna "Overweight," citing "excellent enrollment gains, effective medical cost controls and savvy underwriting."

Aetna could also gain from the Medicare Drug Benefit and a new strategy focusing on small- and medium-sized market segments, Shove said.
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