Credit Suisse Starts Aetna (AET) at Neutral

Credit Suisse initiates coverage on Aetna (NYSE: AET) with a Neutral rating and a price target of $111.00.

Analyst Scott Fidel commented, "We are initiating coverage of Aetna with a Neutral rating and $111 price target, based on a target multiple of 13x times our 2017 Cash EPS estimate of $8.70. While we view Aetna's management team as among the best operators in the industry, we have two primary concerns with the near-term setup for AET shares. The first concern is that we believe Aetna is over-paying for Humana; we believe the deal's premium valuation does not fully discount the significant fundamental challenges that Humana is experiencing across its businesses. The second concern is that Aetna's core stand-alone EPS growth story for 2016 is largely dependent on significantly improving margins in the volatile individual and small group (ISG) market. When considering our concerns around the very high valuation multiple that Aetna is paying for Humana and the downside risks to its strategy to improve margins in its ACA-compliant business, offset by Aetna management's historical strong track of execution, we view a Neutral rating as appropriate."

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 $107.02 yesterday.

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