Opinions
Dr. Richard Evans
Anthem Inc
ANTM-N
COMMENT
Jan 25, 2017
$153.710
Stock price when the opinion was issued
medical services
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Health insurance is exciting. Their valuation trades at a decent 15x earnings. He targets $29 EPS this year. Their growth rate is solid double digits. A great area to hide if you worry about inflation. Revenues are protected, because government programs adjust for inflation. They insure 43 million Americans and he predicts 49 million by the end of this year. Aging demographics are a boost.
(Analysts’ price target is $490.21)
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They just rebranded and the ticker is now ELV. About 50% of their business comes from the commercial insurance market, the rest from government contracts. Past recessions didn't really impact their business. They insure about 50 million US citizens. Their major peer is UnitedHealth, but he prefers Athem because its valuation its 5 PE points lower.
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Considers this as a commercial predominant HMO. Most of the lives on this are going to be sponsored by an employer. A fine business. Typically, over time they run on a medical loss ratio, so tend to run over time on the percentage of premiums that come in that are paid out as claims. As Republicans unveil what they want to do in order to replace Obama care, he thinks you will see some issues emerging that threaten some of the companies that take most of their premiums from employers, that is a long-term concern. In the meantime, this should do reasonably well.