We came across a bullish thesis on Anthem Inc. (ANTM) on Valueinvestorsclub authored by gandalf. We find articles on VIC thoroughly researched by aspiring analysts who tend to think out of the box. Click here for the full article. Here is the summary.
The Indianapolis-headquartered ANTM provides life, hospital and medical insurance plans Its clientele include large and small employers, individuals, Medicaid, and Medicare. The company was listed in 2002 @$20. Political uncertainty has recently undermined the healthcare sector. The poor showing is mirror view of the 2008-2009 period, when the sector had traded poorly to high single digit multiples before bouncing back to normal market multiples.
ANTM belongs to one of the defensive sectors, which tend to be much less prone to downturns during economic recessions. On the contrary, during the major healthcare crises, like the Covie-19, the number of Medicaid registrations grows while the jobless rate rises too.
The company has recently released EPS growth guidance to low-to-mid teens going into 2023, which is much higher than the peer group as well as the S&P 500 index. Oscillating between the high of 21x and low of 6x, ANTM is currently trading at its mean forward multiple.
Company’s proprietary Pharmacy Benefits Management (PBM) business IngenioRX launched in 2019 should help reduce costs for insurance businesses, further aiding the bottom line.
With the ability to generate higher cash flow than net income more often than not, non-cyclical ANTM has generated average return of 16.5% since going public, beating the benchmark S&P 500 by 100%. The company has a well capitalized balance sheet and enjoys a notch-above investment grade debt rating. Currently at 12x forward earnings multiple, ANTM is trading at a deep discount to the benchmark index, and offers an attractive long opportunity.