PacifiCare Shares Fall; Analysts Allege Disarray

PacifiCare Health Systems Inc. shares fell 8.9% Tuesday, a day after the Santa Ana managed-care company said its second-quarter profit beat estimates and less than two months after it cut projections for the full year.

“We are not encouraged by this all-over-the-map behavior,” Prudential Securities Inc. analyst David Shove, who has a “sell” rating on the shares, said in a note to investors. “It strikes us that earnings visibility at this company remains nonexistent, and each quarter is as much a surprise to management as it is to us.”

The Santa Ana company’s changing forecast “suggests again that management is uncertain about underlying medical cost trends,” said analyst Joseph France at Global Health Care Partners. He also rates the stock as “sell.”

PacifiCare shares fell $1.78 to $18.27 in Nasdaq trading. The company’s stock rose 18% on Friday on speculation that the company had better-than-expected earnings in the quarter.

PacifiCare said after U.S. markets closed Monday night that on July 31 it expects to report profit of about 45 cents a share for the second quarter, higher than the 32-cent average estimate of analysts.

Separately, the company is preparing to sell $500 million of debt securities privately, said people familiar with the sale.