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Anthem: Time To Sell Has Long Passed

Summary

The government is set to block the merger of the two large health insurance providers.

Anthem can return to significant stock buybacks to boost earnings per share in a similar manner to the expected boost from the Cigna merger.

The stock is now a buy based on any dips caused by a failed merger, especially under a reduced breakup fee scenario.

Not too surprising, Anthem (NYSE:ANTM) peaked prior to the merger announcement with Cigna (NYSE:CI). The stock reached over $173 based on the excitement over the proposed benefits of the merger.

With all signs pointing to the Department of Justice filing to block the merger, one needs to now consider the opportunity to own Anthem on a stand alone basis. The stock trades at a meager $135 as the market lost enthusiasm for the merger benefits and the possibility of a block became more probable.

The big hiccup in owning Anthem was the $1.85 billion breakup fee that the parties now appear willing to negotiate (via New York Post). Otherwise, Anthem has until January to continue the fight and of course...


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