NEW YORK (AP) -- Shares of health insurers traded lower Thursday after UnitedHealth Group Inc. reported an increase in medical costs and said federal budget cuts are putting pressure on its business.
The nation's largest health insurer said its first-quarter net income sank 14 percent as medical expenses rose. It also said the automatic federal budget cuts, which will hit the government's Medicare program for the elderly and disabled people, will make it harder for the company to reach the top end of its annual revenue guidance.
Citi Investment Research analyst Carl McDonald said the effects of the budget cuts were not included in UnitedHealth's previous forecasts. He rates the company's shares "Buy" with a price target of $64 per share.
UnitedHealth stock fell $2.25, or 3.6 percent, to $59.78 in afternoon trading.
Elsewhere in the sector, Cigna Corp. shares shed $1.09, or 1.7 percent, to $63.78.
Humana Inc. stock gave up $2.07, or 2.8 percent, to $72.48.
WellPoint Inc. shares retreated $1.58, or 2.3 percent, to $67.45.
Coventry Health Care Inc. shares dipped 29 cents to $48.28.
Health Net Inc. shares skidded 84 cents, or 3 percent, to $27.05.
Universal American Corp. shares declined 21 cents, or 2.3 percent, to $8.77.