Aetna's wide product offerings and comprehensive coverage is an operational strength, as is its geographic footprint. These factors, along with cost controls, should enable Aetna to maintain solid earnings growth in FY 2008-FY 2009.
Further, analysts like AET's projected F2008 800,000-900,000 organic net membership growth in its health care segment, superior underwriting discipline, and cost controls. Another positive: on the big client side, the Bank of America Corporation (NYSE: BAC) selected Aetna as its primary benefits provider for its employees, beginning in 2009.
What should one not expect from Aetna? Ill-conceived, poorly-researched endeavors. Aetna is a deliberate, move-forward-cautiously operation with a corporate culture that reflects many of the values of the land of steady habits, Connecticut, its home. The Reuters FY 2008/FY 2009 EPS estimates for AET are $3.99/$4.52.
The risks? Analysts are keeping an eye on medical sector costs, projected to increase 7-9% in F2008: a double-digit increases would hurt AET's results.
The First Call mean rating for AET is: Buy [17 firms]. Mean 2008 target: $55 [high: $60; low: $45].
Stock Analysis: Aetna is a low-risk stock. Investors with an investment horizon longer than 2 years should be rewarded from AET's shares. If you don't already own a consumer product or insurance defensive stock, consider adding AET to your portfolio. Sell / Stop Loss if you were to purchase shares in this company: $32.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
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Reader Comments (Page 1 of 1)
5-30-2008 @ 12:02AM
james carter said...
THEY SHOULD HAVE LOTS OF MONEY AS THEY DO NOT PAY CLAIMS JUST COME UP WITH EXCUSES NOT TO PAY ASK KATRINA VICTIMS ALL MOST3 YEARS LATER AND INSURANCE COMPANIES ARE STILL DANCING HOPING PEOPLE WILL GIVE UP AND GO AWAY.
5-30-2008 @ 12:28AM
gary said...
The key phrase to the whole article is "superior underwriting discipline". Insurance companies who do not practice this find themselves with ever fluctuating prices, which makes it hard to develop a consistent clientele.