We issued an updated research report on the U.S. health insurer
) on Jun 19. The insurer churned out first-quarter earnings of
$1.98 per share, which breezed past the Zacks Consensus Estimate of
$1.56. Earnings also grew 27% year over year.
Better-than-expected earnings came on the back of higher
underwriting margins in the Health Care business and accretion from
the Coventry acquisition.
Aetna is one of the nation's leading diversified health care
benefits' companies. Regardless of facing significant business
challenges and uncertainties in 2014, many of which are occurring
for the first time in the health insurance industry, the company
did not fail to post strong earnings.
Aetna has taken a mix of measures both organic as well as inorganic
to grow its business. The acquisition of Coventry has significantly
improved its market position in both the commercial and government
Moreover, Aetna is also actively working on increasing its
accountable care organizations, to add revenue streams.
The health insurer has been successfully increasing its membership.
The first quarter of 2014 marked its eighth sequential quarter of
medical membership growth.
Aetna is well poised to grow its public exchange business. At the
end of the first quarter, Aetna had 230,000 paid public exchange
members. Based on the company's experience to date, it now projects
to end this year with approximately 450,000 paid public exchange
Other factors such as expanding international business and a strong
capital position make it a favored stock among investors.
Nevertheless, hindrance to premium rate increases, medicare rate
pressure and increasing medical cost are some long-term threats to
Aetna carries a Zacks Rank # 3 (Hold). Other players from the same
industry such as
Select Medical Holdings Corporation
Triple-S Management Corporation
WellCare Health Plans, Inc.
) are also worth considering. All these stocks sport a Zacks Rank
#1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
AETNA INC-NEW (AET): Free Stock Analysis Report
WELLCARE HEALTH (WCG): Free Stock Analysis
SELECT MEDICAL (SEM): Free Stock Analysis
TRIPLE-S MGMT-B (GTS): Free Stock Analysis
To read this article on Zacks.com click here.