ALHC - Alignment Healthcare a buy at J.P. Morgan on Medicare Advantage growth; sees 30% upside
J.P. Morgan has initiated Alignment Healthcare (ALHC -1.4%) with a buy due to the company's Medicare Advantage membership growth and improvement in medical loss ratio ("MLR"). The firm has $20 price target (~30% upside). Analyst Lisa Gill writes that Alignment deserves to trade at a premium to other managed care competitors that are unprofitable. She mentions that the company's AVA platform provides analytics to develop personalized care plans leading to better care and lower costs for members. "We think ALHC's approach is unique compared to legacy managed care plans in that the model is self-sustaining as plan pricing and benefits aren't subsidized by network discounts," she says. Gill adds that she expects improvement in MLR to continue for the next few years as better medical cost performance with existing members is partially offset by new members with initially higher MLR. Read about Alignment's secondary share offering from last month.
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Alignment Healthcare a buy at J.P. Morgan on Medicare Advantage growth; sees 30% upside