HomeMost PopularStruggling Humana Faces Tough Road Ahead

Struggling Humana Faces Tough Road Ahead

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An Unfortunate Downturn

Humana (HUM), a prominent health care plan provider in the United States, has seen better days. Over the last year, its shares have taken a nosedive, losing almost -29% of their value, significantly lagging behind the S&P 500.

Analysts Turn Bearish

The plight of Humana has attracted the attention of financial analysts, who have painted a grim picture by assigning the company a Zacks Rank #5 (Strong Sell). This negative sentiment stems from the company’s recent earnings report, where the results fell disastrously short of the Zacks Consensus EPS estimate by a whopping 57%.

Cost Concerns Loom Large

One of the major stumbling blocks for Humana has been the persistent rise in Medicare Advantage medical cost trends. This surge in costs has led to the company providing β€˜soft’ initial guidance for its fiscal year 2024. Understandably, this has jolted investors and disrupted the company’s streak of positive EPS surprises.

Financial Forecast

The financial forecast for Humana looks bleak as well, with a projected -38% pullback in the Zacks Consensus EPS estimate for FY24 compared to the previous year. Presently, shares are trading at a 20.3X forward 12-month earnings multiple, a figure that exceeds both the five-year median and the industry average computed by Zacks.

Looking Ahead

The road ahead for Humana seems fraught with challenges as the company grapples with escalating costs and dampened investor confidence. With a Zacks Rank #5 (Strong Sell), the company is facing an uphill battle to regain its footing in the market.

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