Canaccord Genuity Morning Coffee on SPDR Health Care E.T.F. (XLV): Good News, Bad News

June 29, 2012 10:26 AM EDT
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Price: $69.88 -0.2%

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Canaccord Genuity Morning Coffee on SPDR Health Care E.T.F. (NYSE: XLV): Good news, bad news.

Shares of hospital operators got a boost after the U.S. Supreme Court upheld the constitutionality of the Obama administration's health-care reform legislation. The new law requires more Americans to have health coverage, reducing hospitals' burden of unpaid bills from the uninsured. Shares of largest private-sector hospital operator in the U.S., HCA Holdings (NYSE: HCA), led gains. While, Tenet Healthcare (NYSE: THC), Community Health Systems (NYSE: CYH) and Health Management Associates (NYSE: HMA) also traded higher. Contrary to hospitals, health insurers' stocks took a dive, as the legislation will put in place a handful of potentially profit-stifling requirements, such as covering people with pre-existing conditions. WellPoint (WLP) is one of the biggest decliners, followed by Aetna (NYSE: AET), Cigna (NYSE: CI), UnitedHealth Group (NYSE: UNH) and Humana (NYSE: HUM). Medicaid-focused insurers, however, jumped as the health-care law should extend Medicaid to millions more people. Gainers include Wellcare Health Plans (NYSE: WCG), Molina Healthcare (NYSE: MOH), Amerigroup (NYSE: AGP) and Centene (NYSE: CNC). However, one analyst at Citi Investment, warned that gains in hospital stocks could be short-lived as investors turn their focus to the November elections given Mitt Romney has pledged to repeal the law.

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