On Tuesday, financial firm Piper Sandler initiated coverage on shares of Humana (NYSE:NYSE:HUM) with an Overweight rating and a price target of $392.00. The firm highlighted Humana's position as a scaled, government-focused managed care organization with a diversified portfolio of value-based healthcare delivery and services. According to the firm, Humana is well-equipped to serve low-income, high acuity Medicare eligible and disabled individuals.
The firm believes that Humana's brand possesses a competitive moat that is supported by consistently high Star ratings. Additionally, the firm anticipates that Humana's specialized healthcare delivery and services infrastructure will lead to improved outcomes and cost efficiencies through center-based, at-home, and pharmacy care.
The upcoming transition in leadership is also seen as a potential positive change, with new CEO Jim Rechtin set to take the helm on July 1, 2024. Piper Sandler expressed optimism that Rechtin's leadership could hasten the company's turnaround.
Piper Sandler's analysis suggests that there could be an upside to Humana's CY24 adjusted EPS guidance and projects over $27.02 in earnings power by CY26. This projection positions the stock as more affordable than current consensus estimates suggest. The firm also indicated that there is a six-month positive catalyst path for Humana.
In other recent news, Humana has been the subject of several key developments. Morgan Stanley (NYSE:MS) initiated coverage on Humana shares with an Equalweight rating, setting a stock target of $374.00.
Still, RBC Capital Markets and Cantor Fitzgerald have revised their price targets for Humana to $353 and $360, respectively, in response to uncertainties about Humana's 2025 earnings per share (EPS) growth targets. Analysts predict a 37% decline in Humana's EPS for 2024, followed by a 24% increase in EPS for 2025, reaching $20.30.
Humana has also announced the appointment of Jim Rechtin as its new President and Chief Executive Officer, effective July 1, 2024. Rechtin brings over two decades of healthcare experience to the role and will succeed current CEO Bruce Broussard.
In financial developments, Humana reported a solid start to 2024, maintaining its full-year EPS guidance at approximately $16 and increasing its individual Medicare Advantage membership growth forecast by 50,000, expecting a net growth of 150,000. These recent developments reflect the ongoing changes and strategic decisions within Humana.
InvestingPro Insights
As Piper Sandler commences coverage on Humana with a positive outlook, real-time data from InvestingPro aligns with the firm's confidence in the company's financial health and market position. Humana's management has been actively repurchasing shares, signaling their belief in the company's value.
Furthermore, Humana's financials show a strong liquidity position, with the company holding more cash than debt on its balance sheet, and has impressively raised its dividend for 7 consecutive years, maintaining dividend payments for 14 years in total.
InvestingPro data underscores Humana's robust market capitalization of $43.05 billion and a solid revenue growth of 14.22% over the last twelve months as of Q1 2023. The company's P/E ratio stands at a reasonable 22.11, with an adjusted P/E ratio of 17.49, reflecting a potentially attractive valuation for investors. Moreover, Humana's commitment to its dividend is evident in its dividend yield of 0.99%, with the last dividend ex-date being March 27, 2024.
To gain a deeper understanding and access more advanced metrics, readers can explore additional InvestingPro Tips that delve into Humana's performance and projections. These tips include insights on the company's profitability, industry standing, and valuation multiples.
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