Ann Hynes, an analyst from Mizuho Securities, reiterated the Buy rating on Humana (HUM – Research Report). The associated price target is $400.00.
Ann Hynes has given his Buy rating due to a combination of factors surrounding Humana’s growth and financial strategies. The positive outlook is primarily anchored in the anticipation of improved Medicare Advantage (MA) rates and competitive pricing actions that are expected to bolster earnings per share (EPS) growth targets for 2025. Hynes also notes that Humana’s management is focused on margin expansion over membership growth, aiming for a margin improvement of 2.0%-3.0% by 2026 through benefit reduction and pricing initiatives, which could lead to a stronger financial position.
Hynes maintains a positive stance despite no update on utilization trends in early 2024, as the company expects the elevated medical cost trends from the fourth quarter of 2023 to serve as a new baseline for the following year. The Buy rating is also supported by the belief that time will benefit Humana, with share price appreciation possibly occurring in the second half of the year as investors seek clarity on utilization trends. Key upcoming events such as the final 2025 Rate Notice and the potential for updates on trends at a competitor conference are considered catalysts for the stock. Additionally, Hynes’s price target of $400 for Humana is grounded in a valuation method aligned with industry averages, suggesting a solid investment case based on earnings potential and comparative metrics.
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Humana (HUM) Company Description:
Humana Inc. is a leading health insurance service provider in the United States. The company, through its Retail division, provides medicare benefits and state-based medicaid contracts, which are marketed on a retail basis to individuals. The Group and Specialty business offers employer group commercial fully-insured medical products and specialty health insurance benefits. Humana offers pharmacy solutions, provider services, home-based services, and clinical programs to the company’s health plan members as well as to third parties through the Healthcare Services segment.
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