UPDATE: Morgan Stanley Reiterates WellPoint at Equal-Weight
Morgan Stanley reiterated its Equal-weight rating on WellPoint (NYSE: WLP) as it believes an AMERIGROUP (NYSE: AGP) divestiture from its Virginia health plan ahead of acquisition is immaterial to the acquirer.
Morgan Stanley noted, "AGP announced plans to divest its Virginia health plan as part of its pending acquisition by WLP: Based on 2011 and 1H12 statutory filings, we estimate that AGP's VA health plan generates annualized EBIT of ~$8-$10mm. Divestiture of these assets would lower our pro forma EPS of $7.85 for the combined WLP-AGP entity by ~$0.02 per share; however, cash received from the divestiture could provide a modest boost to parent cash available for capital deployment in 2013."
WellPoint closed at $58.07 on Thursday.
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