HealthSpring’s prospects ‘flat at best’

By Geert De Lombaerde Posted on September 30, 2009 at 1:38 pm

Dave Shove at BMO Capital Markets has downgraded shares of managed-care insurers, including Franklin-based HealthSpring, saying the policy reform-related trade is worn out and that the industry “faces a number of headwinds as it enters 2010.”

“Flat cost trend is a best case scenario for most players in 2010, while government premiums are likely stretched thin. Depressed membership will drag on managed care earnings. We do not expect a return to meaningful commercial enrollment growth until 2011. Investment income, once a driving force of earnings, is likely to be net neutral.”

HealthSpring shares (Ticker: HS) are down more than 6 percent this afternoon. Shove now rates them ‘market perform’ and sees them going to $10.

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Tags: analyst actions, BMO Capital Markets, Dave Shove, health insurance, HealthSpring Inc., stock valuation