PRUDENTIAL HITS HMOS WITH POOR RATINGS.Byline: Evan Pondel Staff Writer Shares of Health Net and other managed-care companies declined Friday after Prudential Securities portrayed a less-than-stellar outlook for the industry as a whole. The financial group lowered its rating on the health maintenance organization sector to ``market underperform'' from ``market perform,'' expressing concern with the slowing of premium growth. Prudential Analyst David Shove lowered the average price target within the HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, industry by 10 percent to reflect lower cyclical valuations, reports said. The valuation also led Shove to cut Health Net Inc. to ``hold'' from ''buy.'' ``We have no idea why he (Shove) did this,'' said David Olson, a spokesman for Woodland Hills-based Health Net. ``I think that he is postulating something there is no evidence for.'' Shove did not return phone calls seeking comment. Health Net shares declined $1.36, or 5.34 percent, to close at $24.12, while WellPoint Health Networks Inc. fell $4.47, or 5.7 percent, to close at $74.04 Friday on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. . Shove downgraded Health Net two days after the company completed enrollment of more than 6,500 of its California-based employees in a state-certified Health Care Organization. Targeted at improving the quality of work-related medical care and return to work programs, Health Net's HCO HCO Harvard College Observatory HCO Hubbard Communications Office (Scientology) HCO Hearing Carry-Over HCO Health Care Organization HCO Helicopter Control Officer HCO Human Capital Office was certified by California in September 2001. ``Business is going well right now,'' Olson said. ``And we expect another year of solid pricing that will accurately reflect underlying cost trends.'' In Health Net's most recent quarter, the company posted net income of $69 million, or 55 cents a share, compared with $2.3 million, or 2 cents a share, in the same period a year ago. Counter to Shove's downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. , the company was able to cut its medical loss ratio during the quarter, a gauge of health plan profitability that looks at every premium revenue dollar spent by an insurer on medical costs. Looking ahead, Health Net expects to earn between $2.42 and $2.47 a share in 2003, in line with analysts' expectations for the year, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Thomson First Call. Despite the outlook, John Szabo, analyst with CIBC World Markets CIBC World Markets is the investment banking division of the Canadian Imperial Bank of Commerce. It helps governments, large companies, and other large institutions obtain capital and credit and is a primary dealer in U.S. Treasury securities. Corp. in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , has also downgraded Health Net in recent months. ``I just find that there are more attractive buys out there right now, that's all,'' Szabo said. |
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