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BMO initiates healthcare sector coverage

BMO Capital Markets analyst Matt Borsch has initiated coverage of the healthcare sector.

He started coverage of Acadia Healthcare Co. Inc. with an "outperform" rating, writing that the company's "aggressive" acquisition strategy should drive share appreciation in the immediate future. His price target for the company is $52. His EPS estimates are $2.46 for 2017 and $2.82 for 2018.

He rated Centene Corp. at "outperform" based on its "attractive" sector-relative valuation and "synergistic" growth in Medicare Advantage and Affordable Care Act exchanges. His price target for the company is $120. His 2017 and 2018 EPS estimates are $5 and $6, respectively.

Borsch set an "outperform" rating for HCA Healthcare Inc., considering its "fundamentally sound business strategy" which could lead to share appreciation in the long term. His price target for the company is $90. His 2017 and 2018 EPS estimates are $7.12 and $7.82, respectively.

Borsch initiated coverage of Humana Inc. at "outperform." He noted that the company is the only "pure play" Medicare Advantage managed care company, pointing out that Medicare Advantage is the "most attractive" growth area in the sector. His price target for the company is $300. His 2017 and 2018 EPS estimates are $11.75 and $13.05, respectively.

Borsch rated Aetna Inc. at "market perform," saying it has a slower growth profile due to its "commercial-heavy" business mix. His price target for the company is $175. His 2017 and 2018 EPS estimates are $9.63 and $10.32, respectively.

The analyst rated Anthem Inc. at "market perform," given its commercial-heavy business mix that causes slower growth. His price target for the company is $210. His EPS estimates are $11.85 for 2017 and $12.93 for 2018.

The analyst rated UnitedHealth Group Inc. at "outperform," saying that the company is showing "cost competitive advantage" over major rivals, given that it has continued to display strong earnings growth. His price target for the company is $250. His 2017 and 2018 EPS estimates are $9.95 and $11.32, respectively.

He set WellCare Health Plans Inc.'s initial rating at "outperform," considering its strong market position at the intersection of Medicaid and Medicare, which makes it a strong candidate for acquisition by a larger managed care company. His price target for the company is $215. His EPS estimates are $7.05 for 2017 and $8 for 2018.

The analyst rated Cigna Corp. at "market perform," writing that though the company is continuing to rebuild profit in group insurance, it has a slower-growth commercial mix. His price target for the company is $210. His EPS estimates are $10 for 2017 and $11.35 for 2018.

He rated LifePoint Health Inc. at "market perform," saying the recent acquisitions will remain a "partial drag" on near-term earnings. His price target for the company is $59. His 2017 and 2018 EPS estimates are $4.09 and $4.56, respectively.

Borsch rated Mednax Inc. at "market perform," noting that "unfavorable" macroeconomic factors and "slow-paced" acquisitions could cause additional financial volatility in the near term. His price target for the company is $46. His 2017 and 2018 EPS estimates are $3.26 and $3.53, respectively.

Borsch started coverage of Molina Healthcare Inc. at "market perform," saying he will wait to get more clarity on the company's "impaired" underwriting profitability. His price target for the company is $70. His 2017 EPS estimate calls for a loss of $6.14, and his 2018 EPS estimate is 55 cents.