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Here's Why You Should Retain Humana (HUM) in Your Portfolio
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Humana Inc. (HUM - Free Report) has been gaining on strong individual Medicare Advantage membership and the resultant benefits of higher premium revenues. A well-performing CenterWell segment, partnerships and a solid financial stand also remain as tailwinds for the stock.
Zacks Rank & Price Performance
Humana currently carries a Zacks Rank #3 (Hold).
The stock has gained 2.6% in the past six months compared with the industry’s 9.3% growth. The Zacks Medical sector and the S&P 500 composite increased 1.9% and 7%, respectively, in the same time frame.
Image Source: Zacks Investment Research
Favorable Style Score
HUM is well-poised for progress, as evidenced by its impressive VGM Score of A. Here V stands for Value, G for Growth and M for Momentum, and the score is a weighted combination of all three factors.
Robust Growth Prospects
The Zacks Consensus Estimate for 2024 earnings is pegged at $31.42 per share, suggesting 11.1% growth from the 2023 estimate. The consensus mark for revenues is $111.9 billion, which indicates a rise of 9.5% from the 2023 estimate.
Impressive Earnings Surprise History
Humana boasts a strong earnings surprise record. It has surpassed earnings estimates in each of the trailing four quarters, the average surprise being 5.47%.
A Favorable 2024 EPS Target Issued by Management
Management aims to attain adjusted earnings per share growth within its historical long-term target range of 11% to 15%.
Business Tailwinds
The revenues of Humana continue to benefit on the back of higher premium revenues stemming from an uptick in membership within its Medicaid and Medicare businesses. Premiums climbed 14.6% year over year in the first nine months of 2023. Through the Insurance segment, HUM devises affordable health plans and forays deeper into several U.S. communities. The strength of such plans continues to fetch numerous contract wins and renewed agreements with Humana from federal or state authorities.
This year, it received a Medicaid contract from the Oklahoma Health Care Authority. The contract is likely to be effective from early to mid-2024. Management also expects to commence serving the Medicaid members of Indiana from 2024. Therefore, HUM’s total Medicaid membership figure is likely to touch around 1.5 million by the end of 2024.
An aging U.S. population is likely to sustain the solid demand for HUM’s Medicare plans in the days ahead. The strength of its Medicare business has made Humana optimistic to record at par or higher growth in 2024 individual Medicare Advantage membership when compared with the industry level.
Apart from devising Medicare plans, Humana also takes care of the nationwide elderly population through its CenterWell brand launched in 2021. CenterWell Senior Primary Care, along with Conviva Care Center, forms the Primary Care Organization of HUM, which serves 285,000 seniors across roughly 300 centers situated in 15 states as of Sep 30, 2023. The brand discloses frequent expansion plans in the form of establishing senior-focused primary care centers across different U.S. states and thereby, makes primary care available at locations close to the seniors’ homes.
In November 2023, CenterWell brand announced its plan to open four senior-focused primary care centers across Indianapolis within 2024 to address the unique needs of the area’s senior population. The highly beneficial nature of the services provided by the centers may continue to fetch higher Medicare membership growth to Humana.
A series of acquisitions and collaborations undertaken over the years has enhanced the capabilities, diversified income streams and solidified the nationwide presence of the health insurer. In November 2023, HUM teamed up with New York-based comprehensive healthcare services provider, CINQCARE, in a bid to provide care management services to the health insurer’s statewide Medicare Advantage members by providing access to CINQCARE’s "Care at Home" model. It also resorts to divestitures to carve a long-term growth path for the company.
A solid financial position remains in place for Humana, which is substantiated by expanding cash reserves and robust cash-generating abilities. The financial strength imparts it the power to pursue uninterrupted business investments and return capital to shareholders through share buybacks and dividend hikes. In February 2023, management approved a 12.4% increase in the cash dividend.
DaVita’s earnings surpassed estimates in each of the last four quarters, the average surprise being 36.55%. The Zacks Consensus Estimate for DVA’s 2024 earnings indicates a rise of 4.9% while the consensus mark for revenues suggests an improvement of 2.7% from their corresponding 2023 estimates. The consensus mark for DVA’s 2024 earnings has moved 0.4% north in the past 30 days.
The bottom line of Ensign Group beat estimates in three of the trailing four quarters and matched the mark once, the average beat being 1.54%. The Zacks Consensus estimate for ENSG’s 2024 earnings indicates a rise of 9.7% while the consensus mark for revenues suggests an improvement of 7.8% from the respective 2023 estimates. The consensus mark for ENSG’s 2024 earnings has moved 0.2% north in the past 60 days.
Novartis’ earnings outpaced estimates in each of the trailing four quarters, the average surprise being 6.99%. The Zacks Consensus Estimate for NVS’s 2024 earnings indicates a rise of 9.6% while the consensus mark for revenues suggests an improvement of 2.8% from the respective 2023 estimates. The consensus mark for NVS’s 2024 earnings has moved 0.8% north in the past 30 days.
Shares of DaVita, Ensign Group and Novartis have gained 3.9%, 19.5% and 2.2%, respectively, in the past six months.
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Here's Why You Should Retain Humana (HUM) in Your Portfolio
Humana Inc. (HUM - Free Report) has been gaining on strong individual Medicare Advantage membership and the resultant benefits of higher premium revenues. A well-performing CenterWell segment, partnerships and a solid financial stand also remain as tailwinds for the stock.
Zacks Rank & Price Performance
Humana currently carries a Zacks Rank #3 (Hold).
The stock has gained 2.6% in the past six months compared with the industry’s 9.3% growth. The Zacks Medical sector and the S&P 500 composite increased 1.9% and 7%, respectively, in the same time frame.
Image Source: Zacks Investment Research
Favorable Style Score
HUM is well-poised for progress, as evidenced by its impressive VGM Score of A. Here V stands for Value, G for Growth and M for Momentum, and the score is a weighted combination of all three factors.
Robust Growth Prospects
The Zacks Consensus Estimate for 2024 earnings is pegged at $31.42 per share, suggesting 11.1% growth from the 2023 estimate. The consensus mark for revenues is $111.9 billion, which indicates a rise of 9.5% from the 2023 estimate.
Impressive Earnings Surprise History
Humana boasts a strong earnings surprise record. It has surpassed earnings estimates in each of the trailing four quarters, the average surprise being 5.47%.
A Favorable 2024 EPS Target Issued by Management
Management aims to attain adjusted earnings per share growth within its historical long-term target range of 11% to 15%.
Business Tailwinds
The revenues of Humana continue to benefit on the back of higher premium revenues stemming from an uptick in membership within its Medicaid and Medicare businesses. Premiums climbed 14.6% year over year in the first nine months of 2023. Through the Insurance segment, HUM devises affordable health plans and forays deeper into several U.S. communities. The strength of such plans continues to fetch numerous contract wins and renewed agreements with Humana from federal or state authorities.
This year, it received a Medicaid contract from the Oklahoma Health Care Authority. The contract is likely to be effective from early to mid-2024. Management also expects to commence serving the Medicaid members of Indiana from 2024. Therefore, HUM’s total Medicaid membership figure is likely to touch around 1.5 million by the end of 2024.
An aging U.S. population is likely to sustain the solid demand for HUM’s Medicare plans in the days ahead. The strength of its Medicare business has made Humana optimistic to record at par or higher growth in 2024 individual Medicare Advantage membership when compared with the industry level.
Apart from devising Medicare plans, Humana also takes care of the nationwide elderly population through its CenterWell brand launched in 2021. CenterWell Senior Primary Care, along with Conviva Care Center, forms the Primary Care Organization of HUM, which serves 285,000 seniors across roughly 300 centers situated in 15 states as of Sep 30, 2023. The brand discloses frequent expansion plans in the form of establishing senior-focused primary care centers across different U.S. states and thereby, makes primary care available at locations close to the seniors’ homes.
In November 2023, CenterWell brand announced its plan to open four senior-focused primary care centers across Indianapolis within 2024 to address the unique needs of the area’s senior population. The highly beneficial nature of the services provided by the centers may continue to fetch higher Medicare membership growth to Humana.
A series of acquisitions and collaborations undertaken over the years has enhanced the capabilities, diversified income streams and solidified the nationwide presence of the health insurer. In November 2023, HUM teamed up with New York-based comprehensive healthcare services provider, CINQCARE, in a bid to provide care management services to the health insurer’s statewide Medicare Advantage members by providing access to CINQCARE’s "Care at Home" model. It also resorts to divestitures to carve a long-term growth path for the company.
A solid financial position remains in place for Humana, which is substantiated by expanding cash reserves and robust cash-generating abilities. The financial strength imparts it the power to pursue uninterrupted business investments and return capital to shareholders through share buybacks and dividend hikes. In February 2023, management approved a 12.4% increase in the cash dividend.
Stocks to Consider
Some better-ranked stocks in the Medical space are DaVita Inc. (DVA - Free Report) , The Ensign Group, Inc. (ENSG - Free Report) and Novartis AG (NVS - Free Report) . While DaVita currently sports a Zacks Rank #1 (Strong Buy), Ensign Group and Novartis carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s earnings surpassed estimates in each of the last four quarters, the average surprise being 36.55%. The Zacks Consensus Estimate for DVA’s 2024 earnings indicates a rise of 4.9% while the consensus mark for revenues suggests an improvement of 2.7% from their corresponding 2023 estimates. The consensus mark for DVA’s 2024 earnings has moved 0.4% north in the past 30 days.
The bottom line of Ensign Group beat estimates in three of the trailing four quarters and matched the mark once, the average beat being 1.54%. The Zacks Consensus estimate for ENSG’s 2024 earnings indicates a rise of 9.7% while the consensus mark for revenues suggests an improvement of 7.8% from the respective 2023 estimates. The consensus mark for ENSG’s 2024 earnings has moved 0.2% north in the past 60 days.
Novartis’ earnings outpaced estimates in each of the trailing four quarters, the average surprise being 6.99%. The Zacks Consensus Estimate for NVS’s 2024 earnings indicates a rise of 9.6% while the consensus mark for revenues suggests an improvement of 2.8% from the respective 2023 estimates. The consensus mark for NVS’s 2024 earnings has moved 0.8% north in the past 30 days.
Shares of DaVita, Ensign Group and Novartis have gained 3.9%, 19.5% and 2.2%, respectively, in the past six months.