UPDATE: Bank Of America Upgrades Health Net On Good Upside Potential

In a report published Thursday, Bank of America analyst Kevin Fischbeck upgraded the rating on Health Net (NYSE: HNT) from Underperform to Buy, and raised the price target from $33.00 to $59.00.

In the report, Bank of America noted, “We are upgrading HNT to Buy (from Underperform) with a view that margins on new growth will be better than expected on the heels of appropriate rates, fixed cost leverage on growing revenue and upside from a significant G&A outsourcing initiative. We are increasing our 2015/2016 ests to $3.10/$3.80 from $2.92/$3.23, and will update our above consensus 2016 ests for the G&A outsourcing initiative when more details are announced.HNT is the best performing MCO YTD (+46%), but the risk/reward is attractive. HNT trades at 13.5x 2015 consensus estimates, and applying that multiple to our new ‘base case' estimate (which includes a modest contribution from the outsourcing) implies a $59 stock price, or 36% upside potential. Meanwhile, our bull case scenario could justify a $77 valuation or 78% upside potential.”

Health Net closed on Wednesday at $43.29.