That's got to be frustrating for management.
Health insurance giant UnitedHealth Group
Then again, management couldn't have expected much more. Wall Street is a "what will you do for me tomorrow?" kind of place, and management stuck with its rather paltry guidance for 2010. This year the company expects to make $2.90 to $3.10 per share, down from the $3.24 that it registered last year.
CEO Stephen Hemsley even went so far as to say that analysts' estimates for the first quarter are too high. The company is still dealing with a high unemployment rate, which is a double whammy. It lowers enrollment in its profitable commercial business, and it increases the number of people on COBRA, who tend to be high users of medical services. UnitedHealth is also expecting lower payments from government plans to put pressure on the bottom line.
Of course, this earnings season, health insurers including Aetna
Trading at 11 times the middle of next year's earnings, UnitedHealth isn't as cheap as it's been in the past, but it's not particularly expensive, either. Investors that can ride through the tough year -- perhaps using a covered-call strategy to boost the return -- should see the insurer improve once the jobs come back.