Analyst Joseph France says the third-quarter earnings per share is ahead of consensus, due mostly to a better-than-expected tax rate. Although the company reaffirmed the 2003 guidance, it said 2004 earnings per share would be essentially flat, vs. the prior 15% growth. France says the company is presumably losing business to UnitedHealth, Aetna and the Blues, all of which, he suspects, have lower provider unit costs. Additionally, the company cited aggressive pricing by competitors.
Reflecting lost business, France cut the $1.80 2004 earnings per share estimate to $1.55. He also cut the $25 target to $22, at 14.2 times the 2003 and 2004 earnings per share estimates, in line with the historical valuation of the last five years.