Humana (HUM) was recently downgraded from Neutral to Underperform. The downgrade comes as the company sharpens its focus on Medicare Advantage plans that increases its revenue dependency on one segment, rising expenditure, overhang of litigation charges and increasing competition in the industry.
Humana is one of the largest health care plan providers in the United States. Humana provides health insurance benefits under Health Maintenance Organization (:HMO), Private Fee-For-Service (:PFFS), and Preferred Provider Organization (PPO) plans.
Humana reported second quarter 2012 operating earnings per share of $2.34, beating the Zacks Consensus Estimate of $2.23 but falling short of the year-ago earnings of $2.59 per share. Our six month target price of $62.00 equates to an 8.7x multiple of our earnings estimate for 2012.
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