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HMO Health

Tuesday, 11 Mar 2008 | 4:20 PM ET


On a day where the stock market is posting the biggest single-session gains in over five years, there’s one big sector that isn’t getting any of the love: health insurers.

Fast Money: Health Insurer Plays
Health insurers are getting taken to the woodshed today after WellPoint cut its profit forecast on higher costs and lower enrollment. Fast Money's Guy Adami has the diagnosis.

Chalk it up to WellPoint’s announcement that it is slashing its profit forecast. The collateral damage was extensive as shares of rival insurers Humana , Aetna , Cigna and UnitedHealth all dropped substantially even as the broader market surged. So much for the theory that health insurers would be a safe haven in a withering economy.

But amid the sector’s slaughter, Guy Adami finds a possible ray of hope in Humana. It’s the second largest provider of Medicare after Unitedhealth and, since it is unlikely that Congress will pass a Medicare bill anytime soon, Guy thinks HUM is poised for 20% earnings growth and new enrollments for the next three years. Add in HUM’s decent guidance and solid earnings report from last quarter, and Guy doesn’t think this one deserves to be taken to the woodshed with the rest of the group.

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