UPDATE: JP Morgan Initiates Health Net with Neutral, $27 PT on the "State of Continuous Flux"
JP Morgan initiates its coverage on Health Net (NYSE: HNT) with a Neutral rating and a price target of $27.
JP Morgan notes, "[Health Net] recent commercial cost misestimation and guide-down have highlighted the heightened underwriting and earnings volatility that accompanies single-state focused health insurers. Despite these concerns, Health Net remains an interesting asset given its sizable presence in California (~10% of that market), diversified business mix including TRICARE and the potential to improve upon industry-low margins. As a standalone business, Health Net has supplanted commercial enrollment declines with a growing Medicaid presence, positioning it well for the upcoming opportunity from Dual Eligible privatization, especially as California is home to more Dual Eligible beneficiaries than any other state. "
HNT closed at $$25.16 on Tuesday.
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