WellPoint ( WLP) has received a second, more favorable opinion of its 2006 guidance.

True, the company simply reiterated its outlook -- rather than raising it to meet lofty Wall Street expectations -- during its much-awaited investor day this week. But the company has a reputation for beating its own targets, so some experts on Wednesday chose to leave their own, more bullish views intact.

"Since we are paid to produce our best estimates and not simply repeat management statements, we will ignore this guidance," declared Prudential analyst David Shove. "We continue to believe that the synergies from the Anthem deal and the profitability of (Medicare) Part D will drive earnings to $4.80 in 2006. We reiterate our overweight rating for the shares."

Several other analysts viewed WellPoint's 2006 forecast, calling for operating profits of $4.69 a share, as conservative as well.

Patrick Hojlo of Credit Suisse First Boston pointed to history as a guide. Last year, he noted, WellPoint projected higher costs -- and ultimately, lower earnings -- than have materialized. Now, he suggests, the company seems even better positioned to capitalize on favorable industry trends and deliver additional upside going forward.

In the meantime, however, shares of WellPoint have taken a slight hit. The stock, which was trading near an all-time high ahead of this week's update, slipped 1.7% to $77.71 Wednesday.

But Hojlo wasn't necessarily surprised.

"When your stock is up 38% year-to-date -- and 120% over the past two years -- expectations can be hard to beat," he wrote on Tuesday. "The market may have wanted a little more from WLP today in the way of guidance. But ... (because of) our belief that the company will grow operating profit faster than the market currently expects -- 12% to 15% -- over the next three to five years, we are still confident buyers of the stock."

Opportunity Knocks

Goldman Sachs analyst Matthew Borsch offered a similarly upbeat view.

He acknowledged on Tuesday that WellPoint's guidance could trigger "some modest -- but likely very short-lived -- investor disappointment." However, he personally viewed the company's outlook as strong and, like others, saw plenty of room for upside. His own forecast remains a full dime ahead of management's guidance.

To be fair, Borsch did portray WellPoint's enrollment goals of calling for a 3% rise in membership as "unrealistic." Indeed, he believes that the major health insurers could fail to meet their enrollment targets for the third year in a row. Still, he sounds less worried about this particular threat than he has in the past.

"The organic enrollment shortfalls over the past two years have not impacted the torrid pace of earnings driven by slowing commercial medical trend, selling, general and administrative savings and merger synergies," explained Borsch, who has suspended his rating on WellPoint while his firm helps out with the company's pending acquisition of WellChoice ( WC). And "these earnings drivers appear set to continue for 2006."

At the same time, experts foresee new opportunities for the company as well. They point to Medicare Part D, the pharmacy benefit management business and consumer-driven health plans in particular.

Bear Stearns analyst John Rex notes that WellPoint seems more interested in Part D than the company has in the past. To be sure, he says the company remains more cautious than some others about the program's long-term stability. However, he says, the company still expects to enroll between 1.5 million and 2 million participants in the program next year. He had personally been looking for enrollment of just 1 million members instead.

Meanwhile, Hojlo likes some of the company's existing -- but growing -- specialty businesses. He singles out its PBM as an example.

WellPoint is "taking the aggressive step of no longer allowing non-risk customers to carve out the pharmacy benefit," he explains. "In WLP's opinion -- one increasingly shared by employers -- there is meaningful value in having an integrated medical and pharmacy benefit."

Such a shift could hurt major stand-alone PBMs such as Medco ( MHS) and Caremark ( CMX) that manage pharmacy benefits for health plans but have come under attack for allegedly saving their clients less money than they should.

Consumer Trends

WellPoint could start selling a lot more consumer-driven health plans as well.

Already, Hojlo points out, WellPoint has signed up 800 employers -- and some 400,000 consumers -- for the revolutionary low-cost products. However, he suggests, the company could see this business really start to explode.

"We believe the trend is gaining momentum, as 75% of WLP's national account RFPs (requests for proposals) now request CDHC (consumer-driven health coverage) capability," he says. "Further adoption of consumerism across the marketplace seems inevitable, and WLP is well positioned for it."

Of course, rival UnitedHealth ( UNH) is planning for plenty of action itself. Indeed, UnitedHealth managed to attract some attention away from WellPoint's big investor day by unexpectedly announcing that it would buy John Deere Health Care. John Deere ( DE) recently began embracing consumer-driven coverage.

Shove, for one, expects others to follow suit -- with many of them ultimately turning to UnitedHealth for service.

"In the coming months, we expect more Fortune 1000 employers to follow Deere & Co.'s example and enact consumer-driven health plans in their employee health insurance coverage," says Shove, when promoting UnitedHealth's stock. So "we encourage investors to examine this, in our view, premier managed care company on the cusp of the consumerism trend."

UnitedHealth fell 1.6% to $62.24 on Wednesday but, like WellPoint, continues to trade very near its all-time high.

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