Humana Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
Humana Inc. (NYSE:HUM) defied analyst predictions to release its third-quarter results, which were ahead of market expectations. The company beat both earnings and revenue forecasts, with revenue of US$20b, some 8.0% above estimates, and statutory earnings per share (EPS) coming in at US$10.05, 22% ahead of expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Humana
Taking into account the latest results, the consensus forecast from Humana's 19 analysts is for revenues of US$82.2b in 2021, which would reflect a solid 11% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to crater 32% to US$21.30 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$81.9b and earnings per share (EPS) of US$21.48 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$462, suggesting that the company has met expectations in its recent result. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Humana, with the most bullish analyst valuing it at US$540 and the most bearish at US$395 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Humana's growth to accelerate, with the forecast 11% growth ranking favourably alongside historical growth of 5.8% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.8% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Humana is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Humana going out to 2024, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 1 warning sign for Humana you should know about.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
