150-Year-Old Aetna Pitches Itself As A Growth Company

Few investors consider a 150-year-old company as one that has a pathway toward growth, but there are always exceptions to every rule. Barclays' Joshua Raskin maintains an Overweight rating on the 150-year old diversified healthcare company Aetna Inc AET with a $162 price target. In a research report titled "Did You Know Aetna Is A Growth Company?" Raskin justified his bullish stance after attending the company's Investor Day event on Friday.

"Aetna is a growth company," the analyst wrote. "While the perception leans against that claim, Aetna did a very good job of laying out its rationale for that assertions."

Raskin continued with four simple facts to support his thesis:

1. Medicaid is the company's fastest growth segment over the past four years.
2. Revenue coming from the government has grown by 84 percent over the past four years.
3. MA revenues have grown at least 10 percent in each of the past four years.
4. Total top-line growth came in at 7 percent annually since 2014.

Evolution Of Mix

Raskin further noted that Aetna's management was able to shift the company over the past few years to one where it is positioned today to benefit from a higher mix of revenue from growth opportunities. Of particular note, the company "has consciously pivoted" toward the government segment, and "empirical evidence shows clear out-performance" in this segment.

Raskin added that Aetna has done a "remarkable job" over the years and the company's story isn't recognized by investors as it should.

Bottom line, the analyst believes Aetna is still well positioned for continued growth in the broader managed care landscape and expect "strong returns to continue in the future."

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In The Wake Of Failed Merger With Aetna, Humana Regains Outperform Rating From Oppenheimer _________ Image Credit: By GK tramrunner229 - Own work, CC BY-SA 3.0, via Wikimedia Commons