April 02, 2013 at 10:23 AM EDT
Jefferies Boosts Price Target on Health Insurers After Medicare Advantage Rate Announcement (HUM, UNH, CI, more)

After the closing bell on Monday, the Centers for Medicare & Medicaid Services (CMS) announced its final 2014 Medicare Advantage rates. Now, a bunch of health insurers will receive more compensation than previously expected. As such, Jefferies raised the price targets on some health insurers.

“The rate starting point (NPCMAGP) of 2.96% was a significant improvement from the preliminary -2.3% announced in mid-February thanks to the doc fix,” a Jefferies analyst noted. “In fact, this has to be viewed as the best case scenario for 2014.”

“In order of exposure; HUM, UNH, CI, AET and HNT should benefit further from this announcement,” the analyst added.

Jefferies Price Target Increases:

  • Humana (HUM) is rated as “Buy” with a price target of $101, up from $93. This new target suggests a 35% upside to Monday’s closing price of $75.02.
  • United Health Group (UNH) is rated as “Buy” with a price target of $71, up from $67. This new target suggests a 20% upside to Monday’s closing price of $58.97
  • Cigna (CI) is rated as “Buy” with a price target of $74, up from $71. This new target suggests an 18% upside to Monday’s closing price of $62.91.
  • Aetna (AET) is rated as “Buy” with a price target of $63, up from $61. This new target suggests a 20% upside to Monday’s closing price of $52.38.
  • WellPoint (WLP) is rated as “Hold” with a price target of $72, up from $70. This new target suggests a 7% upside to Monday’s closing price of $67.44

The Bottom Line

  • Shares of Humana (HUM) have a dividend yield of 1.28% based on Tuesday’s intraday trading price of $81.06 and the company’s annualized dividend payout of $1.04 per share.
  • Shares of United Health Group (UNH) have a dividend yield of 1.35% based on Tuesday’s intraday trading price of $63.14 and the company’s annualized dividend payout of 85 cents per share.
  • Shares of Cigna (CI) have a dividend yield of 0.06% based on Tuesday’s intraday trading price of $65.84 and the company’s annualized dividend payout of 4 cents per share.
  • Shares of Aetna (AET) have a dividend yield of 1.47% based on Tuesday’s intraday trading price of $54.45 and the company’s annualized dividend payout of 80 cents per share.
  • Shares of WellPoint (WLP) have a dividend yield of 2.15% based on Tuesday’s intraday trading price of $69.91 and the company’s annualized dividend payout of $1.50 per share.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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