Aetna Hits 52-Week High On Strong Q3, Star Rating Action
Zacks Investment Research | Nov 22, 2016 09:09PM ET
On Nov 22, 2016, the stock of Aetna Inc. (NYSE:AET) climbed to a 52-week high of $128.73. The upside in the stock is believed to have been driven by a profitable third quarter reported last month and favorable medicare star rating action.
Over the past 52-weeks, the stock gained 23% compared with a rise of just 5.5% in the S&P 500 index over the same period.
Investors favorably viewed the company’s third-quarter results, which witnessed broad-based revenue and earnings growth.
The quality of earnings was strong as evident by revenue growth of 5% year over year to $15.7 billion. The company’s adjusted earnings per share grew 9% to $2.07 per share and surpassed the Zacks Consensus Estimate of $2.02.
Investors also appreciated management’s cost reducing drive which lowered the adjusted operating expense ratio to 17.6% from 18.6% in the year-ago quarter.
It is noteworthy that the company’s Government business, which includes Medicare and Medicaid, is performing strongly. The company has been witnessing an increase in top line and enrollment in this line of business over the past many quarters and government premiums now represent nearly 50% its total health care premiums. The government business presents a strong growth potential given the ever-increasing demand for its products from the growing baby boomers population.
The rise in share price must also have been favored by a positive tone on the third-quarter earnings conference call regarding the expectation of continued strong performance in the fourth quarter and into 2017. The company continues to expect strong operating performance in its core businesses and raised its operating EPS projection to $7.95 to $8.05 per share.
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