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Earnings Preview: Aetna reports on 3Q Tuesday

Aetna Inc. beat analyst expectations and raised its 2013 forecast after this year's first two quarters, and investors will find out Tuesday morning whether the nation's third-largest health insurer can keep the streak going.

WHAT TO WATCH FOR: Wall Street will be dissecting a much bigger Aetna than it did after last year's third quarter.

The Hartford, Conn., company closed a $6.9 billion acquisition of Coventry Health Care in May. The acquisition is expected to help Aetna build its presence in the state- and federally-funded Medicaid program that covers poor and disabled people and in the federally backed Medicare program for the elderly. Investors will be looking for an update on how the integration of the company is going.

They also will be looking for forecast changes. Aetna said in July that it expects 2013 adjusted earnings of between $5.80 and $5.90 per share.

Aetna, like other health insurers, has been a hot target for investors this year. The stock price has risen about 34 percent in 2013. Analysts say the shares have been helped by strong performances and a growing realization among investors that the health care overhaul won't affect insurers as much as they originally expected.

The federal law aims to cover millions of uninsured people but it also imposes fees and coverage restrictions on the industry.

WHY IT MATTERS: Aetna provides health insurance for about 22 million people, making it smaller than only UnitedHealth Group Inc. and WellPoint Inc. It also sells dental, group life and disability coverage.

WHAT'S EXPECTED: Analysts expect, on average, earnings of $1.52 per share on $12.87 billion in revenue, according to FactSet.

LAST YEAR'S QUARTER: Aetna's earnings rose 2 percent to about $499 million, or $1.47 per share, while revenue rose 5 percent to $8.92 billion. Lower-than-expected health care use helped the company's performance.

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