UBS Just Boosted Aetna By 8% Because Of This
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Aetna Inc (NYSE: AET) health insurance membership is experiencing a positive trend, while retention rates on policies sold through public exchanges are higher than expected, an analyst said on Wednesday.
UBS's A.J. Rice raised his price target nearly 8 percent to $112 a share, maintaining a Buy rating.
Rice cited "improved visibility" regarding the company's 2015 earnings, and noted that his target still puts Aetna "at a slight discount" to the managed care group average.
The Hartford-based insurance company's shares are up more than 13 percent since November and changed hands recently at $95.12, up $0.94 cents.
Aetna boosted its 2015 earnings forecast on Tuesday to at least $7 a share, up from a previous projection of at least $6.90 a share.
Wall Street expects 2015 earnings of $7.16 a share.
The company's improved outlook stems from its deal last month with Gilead Sciences, Inc. (NASDAQ: GILD) to acquire hepatitis C treatments at a discount, as well as higher-than expected membership growth, Aetna said.
Mark T. Bertolini told analysts Tuesday that public exchanges established by Obamacare will "develop into an attractive growth opportunity."
Bertolini touted Aetna's progress in shifting its business model from fee-for-service plans to value-based contracts with accountable care medical groups.
During the past year, Aetna signed contracts with 28 new accountable-care partners, and "doubled...membership" covered by value-based contracts to more than 3 million members, Bertolini said.
The percent of Aetna's medical costs incurred through value-based contracts now equals 28 percent of the company's total medical costs.
Latest Ratings for AET
|Jan 2017||Leerink Swann||Downgrades||Outperform||Market Perform|
|Jan 2017||PiperJaffray||Initiates Coverage On||Neutral|
|Nov 2016||Credit Suisse||Upgrades||Neutral||Outperform|
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