Ahead of the Bell: Coventry Health Care downgraded

NEW YORK (AP) _ An analyst downgraded Coventry Health Care Inc. Thursday after the managed-care provider lowered its second-quarter and full-year earnings forecasts because of higher costs.

Wachovia Capital Markets analyst Matt Perry cut his rating on the Bethesda, Md.-based company, which provides health insurance plans and is involved in Medicare and Medicaid, to "Market Perform" from "Outperform."

Coventry now expects to earn between $3.65 and $3.75 for the year, far below the $4.43 per share analysts polled by Thomson Financial expect on average.

Right now the managed care sector seems to be feeling the effects of the weak economy to a greater degree than expected, and Thursday trading may mark a bottom for Coventry shares, Perry said.

"We are cautious on the near-term outlook," he said in a note to clients. "While many negative events may be uncorrelated it could take several quarters for shares to outperform."

Goldman Sachs analyst Matthew Borsch cut his price target on Coventry to $34 from $47, implying he expects the stock to slip 15 percent from Wednesday's $40 close. He rates shares "Neutral."

So far this year shares have dipped 33 percent.

A company representative was not immediately available for comment.