Anthem Hits 52-Week High on Strong Q4, Latest Acquisition - Analyst Blog

On Mar 18, shares of Anthem, Inc.ANTM scaled a new 52-week high of $157.98 on strong fourth-quarter 2014 earnings and a positive outlook for 2015. The acquisition of Simply Healthcare Holdings, Inc. also contributed to the share price appreciation.

The shares gained almost 63.5% in the one-year period to close at $157.39 in the last trading session. Moreover, Anthem's one-year return of 68.59% was significantly higher than the S&P 500's return of 14.02%. The return was also above that of the other industry players like UnitedHealth Group Inc. UNH , Aetna Inc. AET and Universal American Corp UAM that recorded returns of 58.43%, 46.40% and 53.81%, respectively.

Anthem reported impressive fourth-quarter earnings in the last week of Jan 2015 that were primarily attributable to the improved underlying performance and increased membership across the Commercial and Government segments.

The company remains adept in capitalizing on market opportunities and is taking up initiatives to enhance its membership base. Increased memberships led to higher premiums that made up for the overall cost trends and new fees related to the Health Care Reform. This resulted in a year-over-year increase in the top line.

Anthem's financial position also remained strong, which allowed the board of directors to increase its quarterly cash dividend by nearly 43% and to engage the company in share repurchases.

Management remained upbeat about the company's performance in 2015 and expects enrollments, top line and net income to exceed their respective numbers in 2014. Operating cash flow is also expected to increase in 2015.

Last month, Anthem acquired Simply Healthcare to enhance its offerings to the Medicaid and Medicare program enrollees in the State of Florida. A popular name in the managed care space - Simply Healthcare - is expected to complement the capacities of Anthem by increasing its product portfolio and strengthening its presence in Florida.

Anthem already has a strong foothold in Florida when it comes to Medicaid. This acquisition will give the company an added push in the Medicare Advantage space as well. Although the deal is not expected to have any material impact on the 2015 earnings, we believe initiatives like these (acquiring well-known entities with similar operations) will have enduring results as they lift the company's reputation, thereby enabling it to deliver long-term improvement.

Anthem currently holds a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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