) to neutral from outperform, citing the company's third quarter outlook.
Analyst Patrick Hojlo said the company's third quarter preannouncement suggests that things are a whole lot worse than the company thought - medical costs trends are coming in higher than expected across the company, and the company can't blame flu season anymore. He says his downgrade reflects what appears to be deeper operational issues at the company than even he suspected. Now he suggests investors avoid the Medicaid managed care space altogether unless they have a time horizon longer than 12 months. He cut his $38 price target to $18, 11 times a very hypothetical 2007 earnings per share estimate of $1.62. He also cut his $1.73 2005 earnings per share estimate to 95 cents.