1. What insights from the discussion of the Morgan Stanley 2003 report on eBay apply to the 2013 report on Aetna by Jefferies?
2. What insights from the discussion of the Morgan Stanley 2003 report on eBay apply to the 2013 report on Aetna by Cantor Fitzgerald?
3. What insights from the discussion of the Morgan Stanley 2003 report on eBay apply to the 2013 report on Aetna by Leerink Swann?
4. What insights from the discussion of the Morgan Stanley 2003 report on eBay apply to the 2013 report on Aetna by ValuEngine?
5. How would you use behavioral concepts to explain generally why different analysts arrive at different price targets?

Based in Hartford, Connecticut, Aetna is a large diver- sified health care benefits firm. It serves approximately 44 million people, making it the third-largest Ameri- can managed care organization (MCO) by membership. Its members are diverse, being composed of employer groups, health plans, health care providers, governmental units, government-sponsored plans, labor groups, indi- viduals, and expatriates. Aetna is a global company. Its global health care benefits support approximately half a million members residing in almost every country. The firm offers a wide range of health care insurance products that include medical, dental, pharmacy, group life, and disability plans, as well as Medicaid health care manage- ment services.
In May 2013, Aetna completed the acquisition of the MCO Coventry Health Care Inc. in a cash and stock deal worth $5.7 billion. It did so to strengthen its presence in government-financed health care. By doing so, Aetna added approximately 3.7 million medical members and 1.5 million Medicare Part D members. At the time, the firm’s guidance was for full-year operating earnings esti- mate to fall in the range of $5.70 to $5.85 a share.
At the end of July 2013, Aetna announced that its second-quarter earnings had risen by 17 percent, reflect- ing its growth in membership and revenue. Total medi- cal membership had grown to 22 million as of June 30, from 18.3 million in the previous quarter. As a result, the firm increased its full-year operating earnings estimate to a range of $5.80 to $5.90 per share. At the beginning of 2013, the firm forecast that adjusted earnings would be at least $5.40 per share, but had already raised the forecast three times.
The weak economic conditions that followed the global financial crisis and great recession had led consumers to reduce their health care expenditures, which in turn re- strained costs in Aetna’s commercial insurance business, as well as competitors such as UnitedHealth Group and WellPoint. For the quarter, the amount of premiums Aetna used to pay patient medical costs, known as its total medical benefit ratio, was 82.5 percent, compared to 82.4 percent a year earlier and 81.9 percent during the previous quarter. At the same time, there was awareness that an improving U.S.    economy would induce consumers to resume their previous patterns of health-care usage.
Aetna’s CEO Mark Bertolini indicated that he was cau- tiously optimistic about prospects for 2014, when new health care exchanges were expected to begin operating, as required by the Patient Protection and Affordable Health Care Act, so-called Obamacare. In a July conference call with analysts, Bertolini expressed his optimism when he described being “increasingly confident that we will grow both operating earnings and operating EPS in 2014.” Bertolini’s caution stemmed from concerns about exchange readiness and rates, which would affect the profitability of participating in the exchanges, many of which were run by the states. In this regard, Bertolini said to analysts: “I will tell you we.....