Analyst Joseph France says although Oxford appears to be seeking an acquiror, Friday's announcement that WellChoice has terminated merger talks with Oxford corroborated his view that the health-benefits provider wasn't a likely acquisition target for WellChoice. He believes the deal would have been dilutive for WellChoice at prices lower than where Oxford currently trades. WellCoice is the parent of Empire Blue Cross Blue Shield.
France notes his 2004 earnings per share estimates for Oxford are materially below consensus estimates. He believes the company's margins have peaked, and that it will be difficult for it to grow this year. France has a $37 target, which assumes the stock trades at about 9.3 times his 2004 earnings per share estimate, and 8.3 times his 2005 estimate.