Many investors, and the millions of insured Americans, are concerned about insurance premiums. After all, “Affordable Care” hasn’t proved to be that affordable for many people who already had insurance and have had to adapt to the new price hikes. That puts the major insurance mergers under focus.

Leerink issued a report telegraphing that mergers might be more at risk and that one is more likely to close. There was a greater risk seen here in the Anthem Inc. (NYSE: ANTM) and Cigna Corp. (NYSE: CI) merger than that of Aetna Inc. (NYSE: AET) and Humana Inc. (NYSE: HUM).

Leerink hosted a one-day policy roundtable on May 20 in New York City to discuss issues around health care and how they pertain to major insurance mergers. One topic covered was the future of drug reimbursement and reform, as was the future competitive landscape for managed care, hospitals and health systems with respect to consolidation and stand-alone versus integrated pharmacy benefit managers (PBMs). Another issue was the policy outlook for public exchanges and for Medicare and Medicaid.

After the panel event, Leerink lowered its expectations that the Anthem and Cigna merger will close. Those expectations just dropped from 70% to under 50%. As such, Anthem’s price target was cut to $160 from $195 and Cigna’s target price was cut to $155 from $175.

Leerink’s panelists pointed to meaningful opposition from Fortune 500 employer customers. The firm remained positive on Aetna and Humana as anti-trust scrutiny continues to progress. The report said:

The companies were described as not having made a strong case for how they could lower premiums, through the improved medical and administrative cost structure in the Commercial market. The deal was viewed as being too complex with significant challenges in addressing the overlap in the National Account market through divestiture of large Employer accounts. The President of the NFP Blue brought up another hurdle to deal close given the Blue Card program is likely to be challenged by the rules of the Blue Cross Blue Shield Association when CI competes with the not-for-profit Blues on their own turf.

Cigna’s lowered target of $155 represents roughly a 15 price-to-earnings (P/E) ratio on 2017 expected earnings of $10.30 per share. The lower Anthem price of $160 represents a valuation of roughly 13.3 times the expected 2017 earnings estimate of $12.00 per share.

All five major insurance carriers today were rated as Outperform at Leerink, with upside of 47% for Aetna, 35% for Humana and 17% to 18% for the likes of UnitedHealth, Anthem and Cigna.

Leerink noted that the Aetna-Humana deal was viewed as more likely with ongoing dialog with the U.S. Department of Justice being centered on the needed divestiture. This was consistent with its road show from May 17.

As a reminder, UnitedHealth Group Inc. (NYSE: UNH) already has made its big mergers in past and in recent years. It is believed already to be sized the way it wants and high enough that its chances of any further major consolidation would not be possible inside the domestic health insurance aspect of its business. UnitedHealth shares were last seen trading down only a penny per share at $130.93 on Monday. Other key stock moves were seen as follows:

• Anthem was last seen down 1.3% at $133.93, within a 52-week trading range of $115.63 to $173.59.
• Cigna was down 4.1% at $125.76, and it has a 52-week range of $123.54 to $170.68.
• Aetna was down just 0.1% at $110.50, with a 52-week range of $92.42 to $134.40.
• Humana traded up by 0.4% at $170.51, and its 52-week range is $155.24 to $219.79.

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