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What's in the Cards for Humana (HUM) this Earnings Season?

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Humana Inc.(HUM - Free Report) will report second-quarter 2017 results on Aug 2, before the market opens. Last quarter, the company delivered a positive earnings surprise of 7.84%. Let’s see how things are shaping up for this announcement.

Factors to be Considered this Quarter

Humana’s revenue base is likely to receive a boost from the strong performance of Individual Medicare Advantage, the Group Medicare Advantage and Healthcare Services businesses in the second quarter.

The standalone Prescription Drug Plans membership is likely to grow, adding significantly to the Medicare business.

Nevertheless, Humana is expected to suffer from rising benefit expenses, which will putpressure on margins.

Continuing the trend of the past quarters, individual commercial membership is expected to remain a drag due to the rise in premiums along with benefit redesigns in place since the beginning of 2016.

Another weak performer, the public exchange business, might continue the trend of underperformance in the second quarter as well.

The blocked merger with Aetna Inc (AET - Free Report) that went through numerous regulatory procedures is likely to continue to increase legal expenses, putting pressure on the bottom line in the second quarter as well.

Earnings Whispers

Our proven model does not conclusively show that Humana is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Humana has an Earnings ESP of +1.30%. This is because the Most Accurate estimate is pegged at $3.12, while the Zacks Consensus Estimate stands at $3.08. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank:Humana currently carries a Zacks Rank #4 (Sell).

Note that the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.

Humana Inc. Price and EPS Surprise


Humana Inc. Price and EPS Surprise | Humana Inc. Quote

Stocks to Consider

Here are some companies from the medical sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

AnaptysBio, Inc. (ANAB - Free Report) , which is expected to report second-quarter earnings on Aug 10, has an Earnings ESP of +18.18% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Biodel Inc. (ALBO - Free Report) has an Earnings ESP of +4.82% and a Zacks Rank #2. The company is expected to report second-quarter earnings on Aug 10.

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Aetna Inc. (AET) - free report >>

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Albireo Pharma, Inc. (ALBO) - free report >>

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