UPDATE 4-WellPoint tops Street views, but outlook weighs

* Q2 EPS ex-items of $1.50 vs $1.43 Street view

* Maintains 2009 forecast despite earnings beat

* Sees challenge in growing 2010 earnings

* Shares fall 7 percent (Recasts, adds CEO, CFO, analyst comments)

By Lewis Krauskopf

NEW YORK, July 29 (Reuters) - Health insurer WellPoint Inc (WLP.N) posted quarterly results on Wednesday that topped analyst estimates, but it declined to raise its 2009 profit forecast and warned it would struggle to grow earnings next year in the face of the weak economy.

Shares of the largest U.S. health insurer by enrollment fell 7 percent after it gave its cautious outlook. WellPoint executives said unemployment had grown faster than it expected this year, pressuring employer-based enrollment as companies lay off workers.

"Operationally, they did OK in the second quarter," Edward Jones analyst Steve Shubitz said.

"The larger issue is whether their membership base will not erode any faster than their current expectations. You just don't know how bad unemployment is going to get, when and where the bottom is."

"2010 guidance is basically uninspiring," Shubitz added.

Second-quarter net income fell to $693.5 million, or $1.43 per share, from $750.5 million, or $1.44 per share, a year earlier. The company had around 7 percent fewer diluted shares outstanding.

Excluding net investment losses, earnings of $1.50 a share were 7 cents ahead of the analysts' average forecast, according to Reuters Estimates.

Revenue slipped 1.4 percent to $15.27 billion, below the $15.41 billion that analysts expected.

While WellPoint joined a string of U.S. health insurers whose second-quarter earnings topped estimates, rivals have given improved outlooks for the year.

WellPoint's cautious view stems from the rise in unemployment pressuring its enrollment. It cut its enrollment estimate by 300,000 to roughly 33.6 million expected by year end.

"We saw the rate of unemployment go up much faster in the first half of the year than we had expected," WellPoint Chief Executive Angela Braly said in an interview.

WellPoint is also concerned about taking on more people who elect post-employment Cobra insurance -- members who tend to use more health services -- and is girding for higher costs from an expected stronger flu season.

The company projected 2009 earnings of $5.06 to $5.12 per share, including net investment losses of 54 cents, which is in-line with its prior outlook.

"Investors may view WellPoint as continuing to be conservative in light of the political and economic environment," Goldman Sachs analyst Matthew Borsch said in a research note.

WellPoint shares fell $3.80 to $50.58 in afternoon trading on the New York Stock Exchange. WellPoint shares have had a strong run this year, rising 29 percent through Tuesday.

WellPoint Chief Financial Officer Wayne DeVeydt told analysts on a conference call that he "would not expect operating earnings growth next year in this environment."

On top of persistent high unemployment, slimmer margins with Medicare Advantage plans for seniors are also expected to weigh on earnings, the company said.

In an interview, DeVeydt said predictions call for an economic recovery late in 2010.

"By late 2010 you just can't move the needle on earnings growth, so it really becomes a 2011 growth story," DeVeydt said in the interview.

Enrollment stood at 34.2 million at the end of June, down 3 percent from a year earlier.

WellPoint spent 82.9 percent of its premium revenue on medical costs, down from 83.3 percent a year earlier. The company now expects medical costs to amount to about 82.9 percent of premium revenue for the year, up from its prior view of about 82.7 percent. Wall Street watches this measure closely as a gauge of profitability.

On the positive side, quarterly profit in WellPoint's consumer business soared 67.7 percent, primarily stemming from operating improvements in its seniors business.

UnitedHealth Group (UNH.N) and Coventry Health Care (CVH.N) have posted better-than-expected results this reporting season and given rosier financial forecasts for the year. (Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn, Phil Berlowitz)