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Aetna (NYSE:AET) is expected to report Q4 earnings before the market open on Friday, February 5, with a conference call scheduled for 8:30 am ET.

Guidance

The consensus estimate is 42c for EPS and $8.65B for revenue, according to First Call. On January 12, Aetna announced that its 2010 EPS would likely be "modestly" lower than its 2009 EPS. The insurer reaffirmed its 2009 EPS guidance of $2.75. Aetna warned that its challenges outweigh its opportunities in 2010. Among them are in-group attrition, high COBRA costs pricing pressures, lower Medicare reimbursement, and increased SG&A costs. Opportunities include pricing actions and higher excess capital. Aetna implied that it would react to any tax increases passed as part of the health reform law by increasing the prices it charges consumers. On a positive note, Aetna believes that its Medicaid business is likely to benefit from health care reform.

Analyst Views

On January 13, Deutsche Bank recommended buying shares of Aetna after the stock sold off following management's 2010 guidance. The firm expects margin improvement to be driven by fully-insured price increases over the next two years and maintains a Buy rating on the stock.

Source: Earnings Preview: Aetna