Jefferies noted this:
Cigna consistently proves to be one of the most nimble of the large Commercial insurers and most attentive to customizing benefit packages to its customers needs. Cigna has a partnership relationship with (and an equity stake in) MDLive for telehealth. While telehealth alone is not a reason to buy Cigna, we like Cigna over its Commercial competitors (UnitedHealth and Anthem) due to its lower exposure to Commercial Group Risk member attrition in this challenged employment environment. Increased telehealth adoption should also translate to a shift in prescription fulfillment to non-physical pharmacy locations, which should benefit the company’s Express Scripts business which operates the largest mail pharmacy in the U.S.
The Jefferies price target is $225, while the consensus figure is $244.75. Cigna stock closed on Monday at $187.55 a share.
This stock has been on fire since the March lows. Exact Sciences Corp. (NASDAQ: EXAS) is a molecular diagnostics company focused on the early detection and prevention of the deadliest forms of cancer. The company has commercialized a next-generation, noninvasive colorectal cancer screening test, Cologuard, which received concomitant FDA approval and Medicare coverage in 2014.
Cologuard is included in the colorectal cancer screening guidelines of the American Cancer Society and stool DNA is included in the U.S. Multi-Society Task Force on Colorectal Cancer. The company reaccelerated new doctor additions, has expanded television advertising and signed several new Anthem/BCBS contracts over the past year, allowing the company to go back to some noncompliant patients. Wall Street sees an $18 billion total addressable market that is less than 5% penetrated.
Jefferies has long championed this company and said this:
While still early, we think the company’s new DTC online ordering platform, cologuardtest.com, will emerge as a winner, giving it a channel to reach patients that don’t need a physical physician office visit or lack a primary care physician. Early traction has been encouraging with >150K visits since it launched. Separately, with data indicating cancer screenings (including colonoscopies) down ~90% in March/April we see the company well positioned to address the backlog of screening colonoscopies as gastroenterologists shift capacity toward more urgent diagnostic colonoscopies.
The $120 Jefferies price target is well above the $99.29 consensus target. Exact Sciences closed most recently at $86.02, a solid 6.25% one-day gain.
With an aging population, this may be a safer way for investors to play both health care and telehealth. Quest Diagnostics Inc. (NYSE: DGX) is the largest provider of clinical diagnostic testing and related services in the United States, delivered through a national network of full-service clinical laboratories and over 2,200 patient service centers.
The company announced last week it will acquire its joint venture partners’ interests in Mid America Clinical Laboratories and operate the business by itself. The joint venture was formed about 20 years ago by Quest, Ascension St. Vincent and Community Health Network, and it is now the largest independent clinical laboratory provider in Indiana. Once the all-cash equity transaction closes, Quest will wholly own the company’s laboratory in Indianapolis and approximately 50 patient service centers across Indiana.
As part of the deal, Quest will provide professional hospital lab services under long-term service agreements for about 30 hospital labs owned and operated by Ascension St. Vincent and Community Health Network.
Investors receive a 2.24% dividend. Jefferies has set a $120 price target. The consensus target is $126.54, and Quest Diagnostics stock ended Monday at $110.42.
These are four top telehealth plays for growth investors, two of which are somewhat more conservative. They all offer investors a way to not only catch the trend but have a health care position for portfolios that should remain strong for the rest of 2020 and beyond.