BoA Raises Aetna Estimates

Analyst Todd Richter says the health insurer greatly improved its margins on the back of price increases

Banc of America raised its estimates on Aetna (AET ).

Analyst Todd Richter says the company's third quarter estimate beat his $0.36 forecast. He says earnings were boosted by an expansion in margins on the back of price increases. Richter says peers also will beat consensus estimates, based on the same reasoning, but he thinks that improvement at Aetna is most profound since it previously had the lowest margins in the industry.

Richter expects health insurance premiums to continue rising, supporting earnings growth. He raised his $1.49 2002 earnings per share estimate to $2.05, and raised the $2.50 2003 estimate to $2.90. Richter reiterates his market perform rating.

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