NEW YORK (TheStreet) -- Aetna (AET) shares are up 4.34% to $129.45 in morning trading Monday on reports that the company made a takeover bid for fellow health insurer Humana (HUM) - Get Humana Inc. (HUM) Report for an undisclosed amount on Saturday, according to the Wall Street Journal.
Louisville, KY-based Humana is valued at approximately $30 billion with about 21.5 million total shareholders.
Aetna insures about 46 million people and has a market cap of about $43 billion.
The bid is part of a recent move towards consolidation in the health insurance industry as an unintended consequence of the Affordable Care Act, according to 24/7 Wall St.
Fellow health insurer Anthem (ANTM) - Get Anthem, Inc. Report made a bid to acquire Cigna (CI) - Get Cigna Corporation Report for $53.8 billion, or $184 per share over the weekend, an 18% premium over Cigna's closing price on Friday.
Cigna rejected Anthem's bid on Sunday saying, "The Cigna board has unanimously determined the proposal is inadequate and not in the best interests of Cigna's shareholders." Though the company also said that it would be open to a merger under the right circumstances, according to the Financial Times.
Humana shares are up 0.58% to $203.48 in trading today.
TheStreet Ratings team rates AETNA INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate AETNA INC (AET) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and attractive valuation levels. We feel its strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 53.74% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AET should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- AETNA INC has improved earnings per share by 20.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AETNA INC increased its bottom line by earning $5.66 versus $5.35 in the prior year. This year, the market expects an improvement in earnings ($7.40 versus $5.66).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Health Care Providers & Services industry average. The net income increased by 16.8% when compared to the same quarter one year prior, going from $665.50 million to $777.50 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 13.0%. Since the same quarter one year prior, revenues slightly increased by 7.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- You can view the full analysis from the report here: AET Ratings Report