Aetna, Allstate May Be Portfolio Insurance

Banc of America offers positive comments on both stocks and gives them buy ratings.
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Banc of America Securities boosted its investment ratings on two insurance companies this week, saying each has shown improvement relative to its peers.



nearly complete turnaround and expected low medical costs are helping the company build market share, said Banc of America Securities analyst Joseph France, who upgraded the company to buy from neutral Monday.

France expects Aetna to increase enrollment in the second half of this year, as a result of its recent restructuring, recontracting with providers and focus on medical management. The company also has an advantage in several markets because its medical cost trends appear to be hundreds of basis points lower than the industry average, France said.

The analyst raised his 2003 EPS estimates to $5 from $4.20 and to $6 from $4.85 for 2004. Analysts' consensus estimates are $4.58 and $5.44 a share, respectively. Additionally, France upped his target price to $75 from $65. "Reserves are not an issue for Aetna," the analyst said, "because it makes one of the clearest earnings presentations in the industry."



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unit volume growth trends are improving, according to a survey conducted by Banc of America analyst Brian Meredith. Based on the survey results, he upgraded the stock Tuesday to buy from neutral.

The analyst found that 52.2% of the 90 agents he surveyed believed unit volume growth was up since April 1, as well as on a year-over-year basis. Consequently, the analyst believes earnings will be strong in the next few quarters but that unit volume growth trends aren't reflected in the company's share price. Meredith raised his price target to $43 from $37.

Recently, shares of Aetna were up 3.8% at $62.50, while Allstate was rising 3.3% to $36.81 on the

New York Stock Exchange