Humana Inc. is a managed health insurance company. The company's customer base includes various employer groups, government-sponsored plans, as well as individuals.
Humana serves over 17 million members via its numerous medical benefit plans, and over ~5 million members through its specialty-products offering. The company has displayed strong and consistent growth over the past five years, driven by robust membership additions as well as effective management of medical losses (particularly during the Covid-19 pandemic).
Technically, the stock is trading in a steady uptrend, characterised by a consistent price increase and lack of excess volatility in the past two and a half years. Sentiment surrounding the stock is mostly positive due to the perceived risk being lower.
Humana is also trading in an inclining channel pattern (refer to the upward sloping trendlines on the first chart), characterised by the formation of higher highs and higher lows.
The price is just below the 200-day simple moving average (SMA) of ~$499. A break above this level will be a strong bullish signal.
Share Information
| Share code | HUM US |
|---|---|
| Industry | Health Insurance |
| Market Capital (USD) | 60.56 billion |
| One year total return | -0.76% |
| Return year-to-date | -4.21% |
| Current price (USD) | 488.74 |
| 52 Week high (USD) | 571.30 |
| 52 Week low (USD) | 423.29 |
| Financial year end | December |
| Closing paragraph | The stock is trading slightly lower than a year ago and it could be time to push higher. |
Consensus expectations
(Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 25.24 | 30.59 | 35.30 | 37.27 |
| Growth (%) | 21.20 | 15.39 | 5.59 | |
| Dividend Per Share (USD) | 3.15 | 3.73 | 4.03 | 4.14 |
| Growth (%) | 18.34 | 8.08 | 2.76 | |
| Forward PE (times) | 15.98 | 13.85 | 13.11 | |
| Forward Dividend Yield (%) | 0.72 | 0.79 | 0.85 | |
| Closing paragraph | The market expects double-digit earnings growth over the medium-term as the company's prospects remain attractive given its resilient business model. | |||
Buy/Sell Rationale:
Technical Analysis:
Long-term fundamental view:
| Share Name and position |
SBUX - Stop Loss (Close the position) |
IEX - Buy (Continue to hold) |
BTAL - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 102.92 | 212.62 | 19.20 |
| Current | 101.66 | 218.90 | 19.50 |
| Movement | -1.2% | 3.0% | 1.6% |
| Summary text | The stock has reached our stop loss level and we recommend exiting the trade. |
The price remains above key support and continues to test the 200-day simple moving average. Upside momentum remains halted, which is a concern.
Our profit target is $240 with a trailing stop-loss of $209. Exit the position around 20 October 2023. |
A falling wedge pattern remains of interest to us. The stock is trading below its 200-day simple moving average, though fading downside momentum is supportive.
Our profit target is $21 with a trailing stop-loss of $18.80. Exit the position around 13 December 2023. |
| Share Name and position |
FCX - Buy (Continue to hold) |
SBUX - Buy (Continue to hold) |
KO - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 39.71 | 102.92 | 61.64 |
| Current | 39.85 | 101.66 | 60.47 |
| Movement | 0.4% | -1.2% | -1.9% |
| Summary text |
Price symmetry remains of interest. The stock is trading above its 200-day simple moving average. Upside momentum is fading, and this is a concern.
Our profit target is $47 with a trailing stop-loss at $37. Exit the position around 18 October 2023. |
The price is in a symmetrical triangle pattern. Trading continues to test the 200-day simple moving average. Fading downside momentum supports the bullish trend.
Our profit target is $114 with a trailing stop-loss of $99. Exit the position around 29 November 2023. |
Trading remains in a symmetrical triangle pattern and the stock has dipped below its 200-day simple moving average. Emerging downside momentum is a concern.
Our profit target is $71 with a trailing stop-loss of $58. Exit the position around 15 March 2024. |
