We View a CVS/Aetna Merger as an Operational Positive for Both, In Line With Our H/C Services Thesis
On Oct. 28, several media outlets reported that CVS was in talks to acquire Aetna. If these reports are correct, we believe it will largely be an operational positive for both firms despite some concerns. However, from a valuation perspective, we continue to see strong upside to CVS with the market underappreciating its well-positioned PBM business, but we view Aetna as overvalued because of excessive growth expectations. With that said, we are keeping our $109 fair value estimate and wide-moat ...Aetna is a health care benefits company. The company conducts its operations in three business segments: Health Care, which provides medical, pharmacy benefit management services, dental, behavioral health and vision plans provided on both an insured basis and an employer-funded basis and businesses products and services that complement its medical products; Group Insurance, which primarily includes group life insurance and group disability products and long-term care products; and Large Case Pensions, which manages a variety of retirement products (including pension and annuity products) primarily for tax-qualified pension plans.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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