Humana Inc. Faces Challenges Despite Recent Rally in Stock Price
Humana Inc. (HUM), based in Louisville, Kentucky, stands as one of the largest health insurers in the United States. The company boasts a market capitalization of $35.6 billion, operating through two main divisions: Insurance and CenterWell.
Stock Performance Shows Struggles
Over the past year, Humana has significantly lagged behind the broader market. In the last 52 weeks, HUM stock has declined by 41.7%, while the S&P 500 Index ($SPX) saw a return of 31.1%. Since the start of 2024, HUM shares have dropped 35.4%, compared to the S&P’s gains of 24.7% year-to-date.
Looking at more specific benchmarks, HUM has also fallen short against the SPDR Healthcare Services ETF (XHS), which gained 12% over the past year and 6.2% in 2024 so far.
Recent Developments and Stock Reactions
On Nov. 20, Humana’s stock rose over 5% after RBC Capital Markets praised Mehmet Oz’s nomination to lead the Centers for Medicare and Medicaid Services, viewing it as a beneficial move for the health insurance industry.
Additionally, HUM shares experienced a 12% increase when investors anticipated higher reimbursement rates for Medicare, which was linked to the Trump administration’s policies.
2023 Earnings Forecast and Analyst Insights
Looking ahead to the current fiscal year ending in December, analysts project a 39.2% year-over-year decline in Humana’s earnings per share (EPS) to $15.86. The company’s historical earnings surprises have been mixed; Humana met EPS estimates in three of the past four quarters, with one miss.
Among 24 analysts following HUM stock, the consensus rating leans toward a “Moderate Buy,” consisting of six “Strong Buy” recommendations, one “Moderate Buy,” and 17 “Holds.”
This outlook is slightly less optimistic than it was two months ago when ten analysts rated the stock as a “Strong Buy.”
On Nov. 11, Bank of America Securities upgraded Humana’s rating from “Underperform” to “Neutral,” increasing its price target from $247 to $308. This adjustment reflects a more favorable risk-reward profile following recent elections, alongside expectations for better rates and decreased regulatory burdens. Despite this optimistic shift, the firm maintained a cautious $13 EPS estimate for 2026, which suggests a higher earnings multiple based on the new valuation.
Currently, HUM’s mean price target stands at $302.14, indicating a potential 2.2% increase from its present price. A notably high target of $550 presents a substantial upside potential of 86%.
On the date of publication, Kritika Sarmah did not hold (either directly or indirectly) any positions in the securities mentioned in this article. All information and data in this article are intended solely for informational purposes. For further details, please review the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
