Cigna rejected Anthem's takeover bid, citing antitrust concerns.
TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio says, "Consolidation is great for this industry if the government allows it. There is a presumption that it will."
"I do not know where that confidence comes from," Cramer added.
Cigna said the bid is not in the best interest of shareholders.
On Saturday, Anthem offered $184 per share in cash and stock for Cigna.
Anthem made its offer public to encourage Cigna shareholders to push the company, according to The Wall Street Journal.
Indianapolis-based Anthem is a health benefit company in terms of medical membership in the U.S.
The company manages its operations through three segments including commercial, consumer, and other.
Separately, TheStreet Ratings team rates ANTHEM INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ANTHEM INC (ANTM) 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, impressive record of earnings per share growth, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. 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:
- Powered by its strong earnings growth of 30.37% and other important driving factors, this stock has surged by 55.52% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ANTM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- ANTHEM INC has improved earnings per share by 30.4% 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, ANTHEM INC increased its bottom line by earning $8.95 versus $8.66 in the prior year. This year, the market expects an improvement in earnings ($10.00 versus $8.95).
- 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 23.4% when compared to the same quarter one year prior, going from $701.00 million to $865.20 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 6.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.65, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, ANTM has a quick ratio of 1.50, which demonstrates the ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: ANTM Ratings Report