SVB Leerink downgraded Benefytt Technologies (NASDAQ:BFYT) to “market perform” from “outperform” but raised its price target to $31 from $27.50 after Madison Dearborn Partners agreed to acquire Benefytt for $31 a share.
Shares of Benefytt jumped $8.43, or 38%, to $30.80 on July 13.
Analyst Stephen Tanai writes that Madison’s interest in Benefytt underscores a broader point for the industry that “Medicare health plan distribution remains an attractive market, given rapid growth in the Medicare-eligible population and growing penetration of private health insurance coverage.”
Mr. Tanai said brokers have been gaining a share of distribution, and “we see evidence of a shift toward digital enrollment – a trend that we believe favors the brokers over direct selling on the part of health plans. We expect the Medicare health plans to increasingly rely on the broker channel for enrollment growth going forward.”