On Jun 30, 2014, shares of
) 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
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.
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
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).
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