DOJ Lawsuit Did Not Deter Aetna (AET) Stock Or Any Other, CNBC's Faber Explains
NEW YORK (TheStreet) -- After the Department of Justice filed antitrust lawsuits today to block two major mergers involving four health benefit giants, all of the companies' stocks spiked, CNBC's David Faber reported on "Closing Bell" Thursday.
The DOJ aims to stop the Aetna (AET) and Humana (HUM) $37 billion merger and the $48 billion partnership of Cigna (CI) and Anthem (ANTM), citing concerns that they will reduce competition in the Medicare Advantage market.
"All the stocks are up, it is interesting to note that, isn't it?" Faber commented.
One reason Humana stock may have risen today is the company raised 2016 second quarter earnings guidance of $2.28 per share, compared to its previous estimate of $2.15 a share and analysts' expectation of $2.19 per share.
Humana also raised its outlook on full-year earnings per share to $9.25, higher than the prior expectation of $8.85 a share.
"So that's one reason that stock is up. Another may be, well, it's not clear that going to court is going to be the worst thing," Faber noted.
The companies announced today that they will fight the DOJ's lawsuits in court in order to move ahead with their mergers, he explained.
More importantly, the judge on the case, John Bates, is "from what I hear, favorable to the companies," Faber stated.
Shares of Aetna closed higher by 1.55% to $118.30 and Humana stock ended trading up by 8.4% to $171.71. Cigna stock closed up by 5.42% to $140.32 and shares of Anthem ended trading higher by 2.61% to $139 on Thursday.
Separately, TheStreet Ratings rated Aetna as a "buy" with a score of A+.
This is based on the convergence of positive investment measures, which can be seen in multiple areas, such as its revenue growth, attractive valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. TheStreet Ratings feels its strengths outweigh the fact that the company has had sub par growth in net income.
You can view the full analysis from the report here: AET
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.