Morgan Stanley: 'Future Looks Bright' At Anthem

In a report published Thursday, Morgan Stanley analysts maintained an Equal-Weight rating on

, with a price target of $155, after the company reported its 1Q results significantly ahead of expectations. Anthem reported its 1Q EPS at ~$0.50, ahead of consensus estimates, driven by commercial performance. The aggregate MLR declined 250bps Y/Y mainly on account of lower medical costs in the Local Group and individual businesses. In the report Morgan Stanley noted, "Enrollment was also higher-than-expected in the quarter driven primarily by increases in self-funded membership." Anthem raised its revenue and EPS outlook for FY15 to ~$78.5B and >$9.90, respectively. "Management also mentioned positive trends into 2016 including an expectation for improved Medicare performance, two large National Account wins, and lower ACA headwinds," the analysts said, while adding that the outlook revision looks "conservative to us." The EPS and revenue estimates for 2015 have been raised to $10.10 and ~$78.5, respectively, after after the strong start to the year and to reflect higher self-funded membership. The EPS estimate for 2016 has been raised to $11.30. The analysts believe that the issues highlighted by

are company-specific and should not impact Anthem.