|
Health insurer Anthem
could rise 30 percent on earnings potential: Barron's
Send a link to a friend
 [January 30, 2017]
NEW
YORK (Reuters) - Anthem Inc shares could rise by 30 percent as the U.S.
health insurer is undervalued and has the most room for improvement in
profit margins and earnings among its peers, Barron's reported.
The company also has the lowest price-to-earnings ratio among its peers
including UnitedHealth Group Inc <UNH.N> and Aetna <AET.N>, Barron's
said, adding that the stock trades at just 13 times the projected 2017
earnings, a discount to its four big rivals.
Last week, a U.S. judge blocked Aetna's proposed $34 billion acquisition
of smaller peer Humana Inc <HUM.N>, raising the stakes for rival Anthem
as it battles to close a $54 billion deal to buy Cigna Corp <CI.N>.
If Anthem does manage to complete the deal, investors are likely to view
that as a positive development since the company projects a $3-a-share
in earnings benefits in 2018, Barron's said.
U.S. President Donald Trump and a Republican-controlled legislature are
seeking to undo much of the Affordable Care Act, better known as
Obamacare.
The law has reshaped the U.S. healthcare industry by mandating health
insurance and creating online exchanges where consumers can shop for
individual policies and get subsidies. Companies including Anthem had
cited Obamacare as one of the main reasons their industry needed to
consolidate.
[to top of second column] |
The office building of health insurer Anthem is seen in Los Angeles,
California February 5, 2015. REUTERS/Gus Ruelas/File Photo
Anthem
could be a winner from a potential move by Trump to repeal Obamacare since it
insures nearly 900,000 people on health exchanges and is losing money on that
business, Barron's said.
Barron's listed several possible benefits to earnings: $1 a share from
public-exchange reform, 50 cents from a repeal of a special health-insurer tax,
$2 to $3 from a lower corporate tax rate and $2 from renegotiation or ultimate
lapsing of the Express Scripts drug-benefit contract.
(Reporting by Devika Krishna Kumar in New York; Editing by Lisa Von Ahn)
[© 2017 Thomson Reuters. All rights
reserved.] Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
