Health Care Winners & Losers: Coventry

Coventry Health Care (CVH Quote) shares fell Wednesday in advance of a health care conference speech by Chief Executive Dale Wolf and the release of the insurer's 2009 guidance.

Several other health insurers also saw their stocks drop, as overall indices fell Wednesday.

Bethesda, Md.-based Coventry plans to offer its first earnings guidance for the new year at the J.P. Morgan Healthcare Conference in San Francisco. Wolf is scheduled to talk at 4:30 p.m. Eastern time.

Analyst polled by Thomson Reuters expect, on average, 2009 earnings of $2.57 per share.

But Citi analyst Charles Boorady said in a research note Wednesday he reduced his guidance to $2.45 per share and also cut his target price to $23 from $30. He said that reflects an expected rise in the company's Medicare Advantage medical loss ratio and a 3% commercial enrollment decline due to rising unemployment, among other factors.

Stifel Nicolaus analyst Thomas Carroll said uncertainty over the insurer's guidance may have affected the stock Wednesday. Shares were down more than 7.38%, or 96 cents, to $12.04 Wednesday.

Carroll said he wonders whether Coventry fixed Medicare Advantage pricing problems from last year that led to a higher-than-expected medical loss ratio, which is the percentage of revenue spent on medical expenses.

He noted that some companies adjusted by raising prices and changed benefit designs. They subsequently saw their enrollment numbers fall late last year. Coventry, however, saw its enrollment increase by 38,000 from Nov. 10 to Dec. 10.

The government released overall Medicare Advantage enrollment data Tuesday, and Carroll said he saw strong growth.