Aetna (AET) PT Lifted to $130 at Leerink Partners Following 'Beat and Raise'

Leerink Partners analyst Ana Gupte reiterated an Outperform rating and boosted its price target on Aetna (NYSE: AET) to $130.00 (from $125.00) following "strong" Q1 results.

Gupte commented, "AET reported a very strong "Beat and Raise" 1Q exceeding EPS estimates by 45c while raising '15 EPS guidance by 30c to a range of $7.20-$7.40 as compared to consensus of $7.19 and us at $7.30 (pre 1Q estimates). Revenues came in light from a combination of mis-estimation of the core Medicare Advantage (MA) membership and mix shift to lower priced Public Exchange business. The key driver of the EPS beat was Consolidated & Commercial MLR which were substantially better than expectations as AET adopts the favored pricing strategy of margin over membership. Commercial medical cost trend estimates are now at the lower end of 6-7% guidance as Hep C & inpatient costs are more moderated, and should give comfort to Managed Care investors that utilization is not in a state of cyclical rebound. Public Exchanges are shaping up to be a solid growth driver with 950 K lives with the potential for mid-single digit normalized margins. We see AET as Value name in Managed Care, trading at a discounted P/E of ~13.6x on 1-year forward EPS compared to peers. We expect performance upside from continued positive revisions throughout the year, & multiple expansion as investors get increasingly comfortable that a near-tern underwriting cliff is not in the cards. We reiterate our Outperform rating on the name while raising our PT to $130 (from $125) which represents a P/E of 16.8x on the average of our 2015 and 2016 EPS."

The firm's revised '15 EPS of $7.40 is at the high end of the guidance range while their revised '16 EPS of $8.10 is almost in line with consensus.

For an analyst ratings summary and ratings history on Aetna click here. For more ratings news on Aetna click here.

Shares of Aetna closed at $110.38 yesterday.

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