The healthcare industry is headed for a shakeup after CVS Health (CVS - Free Report) officially announced its purchase of healthcare benefits giant Aetna (AET - Free Report) on Monday.
CVS acquired the health insurer in a cash and stock deal worth roughly $69 billion. Including debt, the deal is valued at $77 billion. The merger will allow the companies to offer more healthcare services at CVS stores.
“This combination brings together the expertise of two great companies to remake the consumer health care experience,” CVS CEO Larry J. Merlo said in a statement.
“We look forward to working with the talented people at Aetna to position the combined company as America's front door to quality health care, integrating more closely the work of doctors, pharmacists, other health care professionals and health benefits companies to create a platform that is easier to use and less expensive for consumers.”
CVS hopes the Aetna buyout will give the drug store giant the ability to become even more of a one-stop-shop. This mega-merger could also help to slowly reshape some of the U.S. healthcare industry. However, shares of both CVS and Aetna dipped on Monday following the announcement.
With all of this said, let’s take a look at three healthcare industry stocks that might prove enticing to investors as the industry continues to shift.
1. Centene Corporation (CNC - Free Report)
Shares of this HMO provider, which serves the under-insured and uninsured with health plans through Medicaid, Medicare, and other programs, have skyrocketed 78.91% this year. At the moment, Centene is a Zacks Rank #2 (Buy) and scored an “A” for Value and a “B” for Growth in our Style Scores system.
For the current year, based on our Zacks Consensus Estimates, Centene’s revenues are projected to climb nearly 18% to $47.84 billion. Centene’s earnings are expected to surge 12.42%. And within the last 60 days, Centene has received 11 positive full-year earnings estimate revisions against zero downgrades.
Centene also sports a 0.37 price to sales ratio, which marks a discount compared to the “Medical – HMO’s” industry’s average. On top of that, the healthcare power is currently trading at 20.30x earnings, helping further demonstrate Centene’s solid value.
2. Triple-S Management Corporation (GTS - Free Report)
This San Juan, Puerto Rico-based independent licensee of the Blue Cross Blue Shield Association is currently a Zacks Rank #1 (Strong Buy) stock that rocks an overall “A” VGM grade. Before Monday’s 1% climb, which helped Triple-S’ stock price hit a new 52-week high, shares of the healthcare company had gained 38% this year—more than double the S&P 500’s pace.
Triple-S’ 0.23 P/S ratio, which marks a nearly 60% discount compared to the “Medical – HMO’s” industry’s average, helped the company score an “A” for Value in our Style Scores system. What’s more, the company’s current quarter EPS are expected to surge 92.86%, according to our current Zacks Consensus Estimates. On top of that, Triple-S’ full-year earnings are projected to jump from $0.13 per share a year ago to $1.23 per share—or 846%.
3. athenahealth, Inc. (ATHN - Free Report)
Athenahealth is a top provider of internet-based healthcare IT services. This company specializes in online and web services—from record keeping software to back-office operations—for an array of healthcare providers. Athenahealth is currently a Zacks Rank #1 (Strong Buy) and earned a “B” grade for both Growth and Momentum in our Style Scores system.
Within the last 60 days, the company received seven positive earnings estimate revisions for its current quarter and full-year, paired with no downgrades. Our current Zacks Consensus Estimates are calling for Athenahealth’s full-year earnings to gain 6.44%.
On top of that, Athenahealth full-year revenues are expected surge 12.46% and hit $1.22 billion. What’s more, shares of Athenahealth have already climbed 26.14% this year.
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