(Bloomberg) — Anthem Inc. (NYSE:ANTM) and Aetna Inc. (NYSE:AET) rallied after the health insurers said profit will probably increase this year, ahead of presentations at the J.P. Morgan Health Care Conference.
Anthem gained 4.9 percent to $134.67 at 10:55 a.m. in New York, while Aetna advanced 3.5 percent to $108.96. Cigna Corp. (NYSE:CI) and Humana Inc. (NYSE:HUM), which Anthem and Aetna are respectively acquiring, also rose.
The stocks were also boosted by comments from the government Monday night about the potential for changes to two elements of the Patient Protection and Affordable Care Act (PPACA) individual health insurance exchange system that have drawn complaints from some insurers.
Anthem said 2016 adjusted profit will probably be at least $10.80 a share, up from $10.16 this year. Cigna, which Anthem agreed to buy in July for $48 billion, told investors late Monday that earnings will increase in the upper-single-digit range. Aetna said its goal is to boost profit by at least 10 percent in 2016.
Aetna's announcement "will likely be viewed positively as it may ease investor concerns around the challenging individual business," Peter Costa, an analyst at Wells Fargo & Co. who rates the shares outperform, said in a research note.
And investors will be relieved Anthem's 2016 guidance wasn't worse because the company had cited pressure on earnings potential in both its Medicaid and individual commercial businesses, the analyst said in a separate note. He rates the stock market perform.
Insurers have struggled to profit from the individual business, which is in the third year of a sweeping set of changes brought about by PPACA. The law, also known as Obamacare, stopped insurers from charging sick people more for coverage, and from denying them policies altogether. It also gave individuals subsidies to help them buy policies, and penalized individuals who remain uninsured.
