Why Should You Hold Onto Anthem (ANTM) in Your Portfolio?
Anthem, Inc. ANTM has been gaining momentum on the back of a healthy revenue stream and strategic initiatives. This leading health insurer also boasts an expanded product portfolio.
The company is well-poised for progress, evident from its VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
Concurrent with second-quarter results, this currently Zacks Rank #3 (Hold) company raised its guidance for 2021. Adjusted net income for the full year is projected to be more than $25.50 per share, indicating growth from the previous estimate of above $25.10. It is on track to achieve a long-term annual adjusted EPS growth target of 12-15%.
Now delve deeper to see what makes it an investor favorite stock.
The leading health insurer is a dynamic stock, which has evolved over the past many years. The company kept modifying and diversifying its business to align with the changes in the industry and has emerged successfully over the past decade. Solid Medicaid and Medicare businesses also contributed to this upside. Anthem is continuously taking several measures to enhance its Medicare and Medicaid businesses to provide affordable, value-based medical care to the communities that it serves.
The company has always witnessed growth on the back of buyouts. The acquisitions of Missouri and Nebraska Medicaid plans of WellCare Health in January 2020 added around 300000 Medicaid members under its coverage. Its Beacon Health buyout, the largest independently held behavioral health organization in the country, should strengthen its position in the space. Anthem also purchased AmeriBen, which helped it increase the commercial and specialty business enrollment.
The health insurance company completed the takeover of Puerto Rico-based subsidiaries including MMM Holdings. In the second quarter of 2021, Anthem bought myNEXUS, Inc., a home-based nursing management company for payors. The acquisition is expected to provide better in-home healthcare facilities, which in turn, will lead to improved health outcomes for individuals.
The company’s growing number of members also impresses. Last year, its medical enrolment rose 4.7% year over year to 42.9 million members on the back of robust organic growth. As of Jun 30, 2021, the same climbed 4.4% year over year to 44.3 million members. For 2021, medical membership is predicted in the range of 44.8-45.3 million, the midpoint of which indicates an upside of 5% from the 2020 reported figure.
On the back of its generous cash flow, the company has been able to deploy capital efficiently for the past many years now. It initiated cash dividends in early 2011 and has raised its dividend consistently ever since. Share buyback activity was resumed last June, considering the company’s solid solvency position. In the first half of 2021, Anthem repurchased shares worth $927 million. The company expects to buy back shares worth $1.6 billion for 2021 and around 60% of the target is already achieved.
All these led to a healthy revenue stream. The company witnessed a CAGR of 9% during the 2015-2020 forecast period. In the first six months of 2021, revenues increased 11.5% year over year on the back of better premium revenues, attributable to its solid Medicaid and Medicare businesses. For 2021, operating revenues are anticipated at $137.1 billion encompassing premium revenues of $116.5-$117.5 billion. The newly-provided guided range is not only higher than the previous projection of $135.1 billion but its midpoint too implies an upside of 13.5% from the 2020 reported figure.
The consensus mark for 2021 earnings stands at $25.63, indicating an upside of 14.01% from the year-ago reported figure.
Price Performance
Shares of this company have gained 27.5% in the past year, outperforming its industry’s growth of 17.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Other companies in the same space, such as The Joint Corp. JYNT, Molina Healthcare, Inc. MOH and UnitedHealth Group Incorporated UNH have also rallied 413.7%, 32.7% and 21.7%, respectively, in the same time frame.
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