Health insurance stocks were not spared on March 12, the worst trading day on Wall Street since Black Monday in 1987. UnitedHealth Group, Cigna Corp., Anthem, Inc., and Humana Inc. all closed at least 9% down from the day before. Analysts say the gloomy view of payers is justified, despite carriers’ efforts to boost investor confidence.
In a March 9 note describing financial models of the COVID-19 pandemic based on the 2018 flu season, Credit Suisse analyst A.J. Rice projected “a negative EPS [earnings per share] impact relative to our 2020 EPS estimates ranging from 1.6% for Cigna to 14.4% for Humana” for the first quarter of 2020, adding that “for the full year, this results in negative EPS impact of 0.8% for Cigna to 3.7% for Humana.”