Jefferies Raises Price Target on Aetna Inc. (AET) Follow Q1 EPS Beat of ~50%

Jefferies is maintaining its Hold rating on shares of Aetna (NYSE: AET) and is raising its price target from $38 to $43 following the company's near 50% EPS beat.

The company reported its Q1 results with EPS of $1.43 when the Street and firm was expecting $0.97 and $1.01. The firm reports that the upside came from a consolidated MBR that was 410 bps better than it previously expected.

AET also raised its FY11 guidance to an EPS range of $4.20-$4.30 from $3.70-$3.80. To reflect the solid Q1 results and new guidance, Jefferies is raising its FY11 and FY12 EPS estimates from $3.71 and $3.98 to $4.24 and $4.25.

An analyst at Jefferies comments, "AET's 1Q Commercial MBR excluding PPD was 79.8%. After adjustments, that percent would be at or below the MLR floor, viewing 1Q in isolation. The forecast for upward seasonal trending brings the MBRs above the floor. That gap represents theoretical upside for AET if cost trend remains depressed. However, our analysis suggests that gap, however wide it is, is narrower than peers' after these results. We see better upside from HealthSpring Inc. (NYSE: HS), Humana Inc. (NYSE: HUM) and Health Net Inc. (NYSE: HNT)."

For more ratings news on Aetna click here and for the rating history of Aetna click here.

Shares of Aetna closed at $41.45 yesterday.

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