Earnings Preview: Humana

Aug. 1.08 | About: Humana Inc. (HUM)

Humana (NYSE:HUM) is expected to report Q2 earnings before market open Monday, Aug. 4, with a conference call scheduled for 9:00 am ET.

Guidance

The consensus estimate is $1.18 for EPS and $7.14B for revenue, according to First Call. The consensus range for EPS is $1.12 to $1.21, with a revenue range of $6.96B to $7.31B. For Q1, the company reported EPS 47c vs. consensus of 45c and revenue $6.96B vs. consensus of $6.94B.

Analyst Views

On June 19, the company reaffirmed Q2 EPS guidance $1.15 to $1.20 vs consensus of $1.18. Positive catalyst's for Humana's earnings this quarter include a possible expansion of Medicare Advantage members and the acquisition of CompBenefits and KMG America. Negative risks for Humana this quarter include increased competition in getting more Medicare Advantage business and increased medical costs.

On June 18, Oppenheimer's analysis suggests that the company has the cash at its subsidiary level, and that the cash can be transferred to the parent company. The firm believes investors will soon begin to focus on this large cash balance, and maintained its Outperform rating. On July 8, Credit Suisse said it remains cautious on the Managed Care industry heading into Q2 earnings as the firm does not believe all the Medicare and Medicaid pressures have been fully "fleshed out yet." The firm lowered its price target for Humana to $60 from $73.