Here's Why Investors Should Hold Humana (HUM) in Portfolio
Humana Inc. HUM is aided by an expanding premium base, a robust 2023 business outlook, buyouts and collaborations, and a notable financial position.
Zacks Rank & Price Performance
Humana currently carries a Zacks Rank #3 (Hold).
The stock has declined 2.4% in a year compared with the industry’s 6.3% decline. The Zacks Medical sector has dipped 0.7% but the S&P 500 composite has risen 13.8% in the same time frame.
Image Source: Zacks Investment Research
Favorable Style Score
HUM boasts an impressive VGM Score of A. VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
Robust Growth Prospects
The Zacks Consensus Estimate for Humana’s 2023 earnings is pegged at $28.25 per share, suggesting growth of 11.9% from the prior-year reported figure. The consensus mark for 2024 earnings is pegged at $32.1 per share, indicating an improvement of 13.6% from the prior-year estimate.
Impressive Earnings Surprise History
HUM’s bottom line outpaced estimates in each of the trailing four quarters, the average surprise being 5.78%.
A Strong View for 2023
Management forecasts adjusted revenues to be within $100.7-$102.7 billion this year, the midpoint of which suggests 9.5% growth from the 2022 figure.
Adjusted earnings per share are anticipated to be a minimum of $28.25 in 2023, which indicates an improvement of 11.9% from the 2022 level.
Key Business Tailwinds
Humana gains on the back of an expanding customer base, which it earns through distributing cost-effective health insurance plans across different U.S. communities and making efforts to upgrade such plan offerings from time to time.
The strength of these plans fetches numerous contract wins and renewed agreements from federal or state authorities. Increase in membership fetches the resultant benefit of improved premiums, the most significant contributor to a health insurer’s top line.
An aging U.S. population is likely to sustain the solid demand for the Medicare plans of Humana. Management estimates individual Medicare Advantage membership to witness a minimum membership growth of 825,000 in 2023. In order to cater more effectively to the aging population, HUM has the CenterWell brand in place.
This August, the health insurer introduced CenterWell Primary Care Anywhere program to provide enhanced primary care to seniors at home across specific Louisiana and Georgia locations.
A series of acquisitions undertaken over the years has enhanced Humana’s capabilities, diversified income streams, expanded its global presence and widened the customer base. HUM often resorts to collaborations with well-reputed organizations to launch new plans or upgrade features within the existing ones.
Humana boasts a solid cash position and cash-generating abilities, with the support of which it can undertake uninterrupted growth-related initiatives. As of Jun 30, 2023, its cash and cash equivalents of $16.2 billion were way higher than the short-term debt of $2 billion. In the first half of 2023, HUM generated operating cash flows of $9.9 billion, which increased nearly eight-fold year over year.
Stocks to Consider
Some better-ranked stocks in the Medical space are LeMaitre Vascular, Inc. LMAT, InMode Ltd. INMD and Molina Healthcare, Inc. MOH. While LeMaitre Vascular currently sports a Zacks Rank #1 (Strong Buy), InMode and Molina Healthcare carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
LeMaitre Vascular’s earnings surpassed estimates in two of the last four quarters and missed the mark twice, the average surprise being 2.27%. The Zacks Consensus Estimate for LMAT’s 2023 earnings indicates a rise of 21.5%, while the same for revenues suggests an improvement of 20.9% from the respective year-ago actuals. The consensus mark for LMAT’s 2023 earnings has moved 8.3% north in the past 30 days.
InMode’s earnings beat estimates in each of the trailing four quarters, the average surprise being 3.85%. The Zacks Consensus Estimate for INMD’s 2023 earnings suggests an improvement of 12.4%, while the same for revenues suggests an improvement of 19.1% from the respective year-ago actuals. The consensus mark for INMD’s 2023 earnings has moved 0.4% north in the past 60 days.
The bottom line of Molina Healthcare outpaced estimates in each of the trailing four quarters, the average surprise being 7.18%. The Zacks Consensus Estimate for MOH’s 2023 earnings suggests an improvement of 15.3%, while the same for revenues suggests an improvement of 3.4% from the respective year-ago actuals. The consensus mark for MOH’s 2023 earnings has moved 0.8% north in the past 30 days.
Shares of LeMaitre Vascular and InMode have gained 17.7% and 29.6%, respectively, in a year. However, the Molina Healthcare stock has declined 6.7% in the same time frame.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Humana Inc. (HUM) : Free Stock Analysis Report
Molina Healthcare, Inc (MOH) : Free Stock Analysis Report
LeMaitre Vascular, Inc. (LMAT) : Free Stock Analysis Report
InMode Ltd. (INMD) : Free Stock Analysis Report
