Analyst Steve Baxter from Wells Fargo maintained a Buy rating on Humana (HUM – Research Report) and keeping the price target at $350.00.
Steve Baxter has given his Buy rating due to a combination of factors indicating Humana’s solid performance and promising business trajectory despite some challenges. For one, Humana’s first quarter adjusted earnings per share (EPS) surpassed expectations, coming in significantly higher than both Wells Fargo Securities and consensus estimates. Additionally, the company’s total revenue exhibited a healthy year-over-year increase and also exceeded the forecasts. Baxter noted Humana’s medical loss ratio (MLR) was favorable compared to his model, and operational costs were managed more effectively than anticipated, leading to a better operational cost ratio.
Moreover, Humana reaffirmed its guidance for the 2024 adjusted EPS, and despite withdrawing its 2025 EPS growth targets due to rate challenges, the company still targets growth, albeit with a more conservative outlook. Membership growth in various segments showed positive trends, slightly outperforming estimates, which bodes well for future revenues. While there are uncertainties that Humana will face, including competitive actions and cost trends, Baxter appears confident in the company’s ability to navigate these challenges, supporting his Buy rating for Humana’s stock.
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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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