Market Overview

Don't Expect Failed Humana Deal To Quash Aetna's Desire For M&A

Share:
Don't Expect Failed Humana Deal To Quash Aetna's Desire For M&A
Related AET
8 Stocks Moving On Trump's Latest Obamacare Comments
Cigna Says End To ACA Subsidies Would Likely Increase Premiums
City Holding Co Buys DowDuPont Inc, iShares U.S. ... (GuruFocus)

Analysts at Citi initiates coverage of Aetna Inc (NYSE: AET) with a Buy rating, $180 price target and named to the firm's "Citi Focus List."

Aetna should be viewed as a "strong diversified health insurer" that is also well positioned to gain share within the government segment and has "stable entrenched position" in its commercial unit, Citi's Ralph Giacobbe stated in a report. This will help the company achieve a sustainable high-single-digit operating earnings growth over the years with a supportive capital deployment program to add a "boost" to earnings per share.

After Aetna's failed attempt at acquiring Humana Inc (NYSE: HUM), the company is expected to focus on organically growing its Medicare Advantage build-out with a more aggressive geographic reach, the analyst continued. In addition, the company still has room to grow within the under penetrated Medicaid market and these two sectors alone could provide a "sizeable new business pipeline" for the coming years.

In fact, expansion through large M&A deals is now "off the table" and the company is committed to a 2018 goal in which 60 percent of MA beneficiaries have access to an Aetna plan versus just 49 percent in 2016, the analyst argued However, after the company succeeds in delivering organic growth it will likely focus on M&A deals for further growth and if it doesn't find any potential acquisition it can return excess capital to shareholders through share repurchases or a dividend.

Related Links:

Putting Failed Aetna Deal Behind It, Humana Is Refocused On Growth; Analyst Upgrades The Stock

Positioning For The 'Era Of Trump': Pair Trades In Managed Care, Healthcare Facilities

Latest Ratings for AET

DateFirmActionFromTo
Oct 2017BMO CapitalInitiates Coverage OnMarket Perform
Oct 2017JefferiesMaintainsHold
Sep 2017ArgusMaintainsBuy

View More Analyst Ratings for AET
View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas News Health Care Price Target Reiteration M&A Analyst Ratings Best of Benzinga

 

Related Articles (AET + HUM)

View Comments and Join the Discussion!
Loading...

Partner Center

Loading...