Back to top

Analyst Blog

On Jun 30, 2014, shares of Aetna Inc. (AET - Analyst Report) jumped to a 52-week high of $82.70. With about 2.9 billion shares exchanging hands in the last trading session, shares gained 1.2%, finally closing at $82.06.   

The rally in the stock was brought about by investor optimism on the company which recently experienced a positive rating action from A.M. Best Co.  The company has also been performing strongly, unfazed by the challenges grappling the health insurance industry.

Aetna delivered positive earnings surprise in two of last four quarters, with an average beat of 8.4%.

Year to date, the stock has gained 22.2%, higher than 10.7%, 20.6% and 7.5% clocked by its peers, UnitedHealth Group Inc. (UNH - Analyst Report), WellPoint Inc. (WLP - Analyst Report) and Cigna Corp. (CI - Analyst Report), respectively.  

Last month, Aetna announced the formation of another Accountable Care Organization (ACO) with LHS Health Network. Via this agreement, Aetna will serve its members in Camden, Burlington and Gloucester counties. Notably, ACOs allow the company to exercise tighter control over medical management, leading to 10% savings on average. Such news fortifies investors’ confidence in the company which is making relentless efforts to serve its members at the most reasonable cost.

The insurer scored strongly in the rating action taken up by A.M. Best Co. last month. The rating agency upgraded the issuer credit rating (ICR) of  units – Aetna Health and Life Insurance Company (AHLIC) – to “a+” from “a” and affirmed the FSR of ‘A’ along with reiterating the ICR of “bbb+” and debt ratings of Aetna.

Aetna has made considerable investments in products and technology, with an intention to extend its core health business and capitalize on exciting new consumer and provider opportunities emerging in the marketplace. These initiatives bode well for the company which is seeking to diversify its operations.

Aetna’s Coventry acquisition is turning out to be more accretive than earlier estimated which is contributing to overall earnings. Aetna is also making inroads into international markets, which offer huge growth opportunities.

Aetna carries a Zacks Rank #2 (Buy).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.00 +3.09%
SANCHEZ ENE… SN 34.18 +2.67%
PANTRY INC PTRY 21.02 +2.09%
INTEL CORP INTC 35.15 +1.88%
PIPER JAFFR… PJC 54.54 +1.70%