On Apr 3, 2013, shares of
) hit a 52-week high of $55.62.
Aetna completed the sale of its Missouri Medicaid business,
called Missouri Care, to
WellCare Health Plans, Inc.
) as a part of proposed acquisition of
Coventry Health Care, Inc.
). The deal is a net positive for Aetna since in exchange of
foregoing 100,000, members served by Missouri Care, Aetna will
gain access to 250,000 members served by Health Care USA.
Aetna also announced a four-year reinsurance agreement with
Vitality Re IV Limited, a newly-formed special purpose insurance
company based in the Cayman Islands in January. The transaction
is expected to release capital held with respect to Aetna's
commercial group health business, thereby effectively meeting the
risk-based capital requirements set by state regulators.
Also, to return more value to shareholders, in February, the
Board authorized Aetna to buyback additional $750 million
Aetnais aggressively looking to generate incremental fee
revenues from Accountable Care Solutions (ACO). On Mar 11, 2013,
Aetna announced the formation of an ACO with ProHealth
Physicians, Inc. Previously, in January, the company agreed to
form an ACO with Texas Health Resources.
Previously, Aetna reported positive earnings surprise in 2 of
the 4 quarters in 2012, with an average beat of 3.53%. The Zacks
Consensus Estimate for the company's first quarter of 2013 is
currently pegged at $1.40 per share, representing a
year-over-year increase of 4.64%. Aetna guided FY13 operating
earnings per share to a minimum of $5.40.
The valuation of Aetna looks attractive. The shares are
trading at a 7.4% premium to peer group average on a
price-to-book value basis and at a discount of 16.1% on a
price-to-earnings. The return on equity of 16.9% is 37.4% higher
than the peer group average of 12.3%.
Aetna carries a Zacks Rank #2 (Buy). Another healthcare stock
worth considering is
Health Net Inc.
) - Zacks Rank #1 (Strong Buy).
AETNA INC-NEW (AET): Free Stock Analysis
COVENTRY HLTHCR (CVH): Free Stock Analysis
HEALTH NET INC (HNT): Free Stock Analysis
WELLCARE HEALTH (WCG): Free Stock Analysis
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