Stifel Nicolaus Analyst Upgrades Health Net

NEW YORK (AP) — A Stifel Nicolaus analyst upgraded Health Net Inc. Tuesday after conversations with management improved his confidence in the managed care provider.

Analyst Thomas Carroll raised his rating to "Buy" from "Neutral" and set a $25 share price target. He boosted his 2010 earnings-per-share estimate to $2 from $1.70.

"After recent conversations with management, and subsequent analyses, we are more comfortable with our 2010 estimate and believe that it could top current consensus of $1.82, and our prior estimate of $1.70."

The upgrade comes as Wall Street remains relatively cautious on Health Net. UBS, Credit Suisse-North America, Wells Fargo Securities, and Argus Research, and Dowling & Partners, and Deutsche Bank-North America analysts maintain "Hold" or equivalent ratings.

BMO Capital Markets, Cowen and Co., Citi, and Barclays Capital all maintain "Sell" or "Underperform" ratings on the company, while only Oppenheimer & Co. and Goldman Sachs have "Buy" or equivalent ratings.

The upgrade by Stifel Nicolaus comes months after the Health Net lost its contracts for Tricare, the Defense Department's health care program for military members, their families and survivors. Fitch Ratings downgraded Health Net, saying the loss of the Tricare contract is significant, as it comprises 49 percent of the Health Net's enrollment and 90 percent of its 2008 earnings.