Humana: A Great Starter Stock For Insurance Investors
Humana: Misunderstood And 35% Undervalued
Convex Strategies • 11 Comments
Convex Strategies • 11 Comments
Fri, Jul. 22, 8:40 AM
- Johnson & Johnson (NYSE:JNJ) upgraded to Buy from Hold by Argus Research. Price target raised to $145 (16% upside) from $130.
- Humana (NYSE:HUM) upgraded to Buy from Hold by Jefferies. Price target raised to $210 (22% upside) from $199.
- Teva Pharmaceutical Industries (NYSE:TEVA) upgraded to Buy from Hold by HSBC. Price target raised to $65 (19% upside) from $61.
- Relypsa (NASDAQ:RLYP) downgraded to Neutral from Buy by Citigroup. Price target raised to $32 (0% upside) from $25.
- Evoke Pharma (NASDAQ:EVOK) downgraded to Hold from Buy by Noble Financial. Downgraded to Hold from Buy by Brean Capital. Downgraded to Neutral from Buy by Rodman & Renshaw.
- Merck (NYSE:MRK) downgraded to Market Perform from Outperform with a $62 (5% upside) price target by BMO Capital.
- St. Jude Medial (NYSE:STJ) downgraded to Neutral from Outperform by Wedbush. Price target raised to $84 (3% upside) from $70.
- Teva Pharmaceutical Industries (TEVA) downgraded to Neutral from Buy by Goldman Sachs. Price target lowered to $60 (10% upside) from $70.
Thu, Jul. 21, 12:12 PM
- Humana (HUM +5.7%) jumps on more that double normal volume as investors respond to its increase in 2016 and Q2 guidance. The company says its upward revisions were prompted by better-than-expected performances in its Medicare Advantage and Healthcare Services businesses, although tempered a bit from continuing challenges in its individual commercial medical business.
- The company new expects EPS for the year to be at least $8.56 versus its previous mark of $8.32 (+2.9%). On a Non-GAAP basis, EPS should be at least $9.25, up 4.5% from the previous target of $8.85.
- Its expectation for Q2 EPS is now at least $2.03 compared to the previous mark of $2.06. On a Non-GAAP basis, the EPS target is now ~$2.28 versus the previous forecast of at least $2.15.
- Pretax earnings of the Medicare Advantage unit should be ~$185M or $0.76/share due to operating initiatives that resulted in favorable medical claims development and lower utilization.
- Pretax earnings in Healthcare Services should be ~$62M or $0.29/share due to higher-than-projected earnings in the pharmacy business.
- Humana established a premium deficiency reserve (PDR) related to its Individual business in Q4 of last year. Based on a recent evaluation of claims data, it has increased its PDR for this year by ~$208M pretax ($0.86/share). Net anticipated pretax expenses through Q2 will be ~$52M ($0.22/share). The two items together comprise the $1.08/share line item downward adjustment in its overall earnings guidance update (FY16 financial guidance table).
- The company also reports that its has filed proposals for significant rate increases and service area changes with various Departments of Insurance regarding individual insurance for consumers. It intends to almost completely exit Affordable Care Act (ACA)-compliant off-exchange markets by next year. Its revised geographic presence will be pared down to 156 counties across 11 states from 1,351 counties across 19 states. Its premiums from ACA-compliant offerings will be $750M - 1B this year, far short of the projected $3.4B.
Thu, Jul. 21, 10:38 AM
- It's official. The U.S. Department of Justice (DOJ) has filed an antitrust suit in U.S. District Court in Washington, DC attempting to block the Anthem (ANTM +1.8%) and Cigna (CI +0.8%) merger and the Aetna (AET +0.9%) and Humana (HUM -0.4%) merger. In the complaint, the DOJ said the deals would be anti-competitive and would not be in the best interests of consumers.
- Unsurprisingly, the four companies take the opposite view.
Thu, Jul. 21, 5:27 AM
- With a decision on their merger expected within days, Aetna (NYSE:AET) and Humana (NYSE:HUM) remain in discussions with the DOJ, trying to convince federal regulators that their $37B deal will be good for seniors in the Medicare Advantage market.
- The insurers have pitched divestitures, with contracts ready to be signed for assets in markets where their coverage overlaps, but so far, the DOJ has not been convinced by the offers.
Tue, Jul. 19, 10:37 AM
- According to Bloomberg, the U.S. is preparing litigation to block the Anthem (ANTM -2.2%)/Cigna (CI -2%) and Aetna (AET -3.5%)/Humana (HUM -4.2%) mergers over antitrust concerns.
- Previously: Humana, Aetna slide on chatter over Justice Dept. meeting (July 7)
- Previously: Anthem-Cigna deal in jeopardy? (June 30)
- Update: The Department of Justice filed an antitrust lawsuit on July 21 opposing both mergers.
Fri, Jul. 15, 10:10 AM
- Wells Fargo ticks off 20 S&P 500 stocks with the most upside potential vs. consensus, and the 20 with the most downside risk vs. consensus.
- The list is compiled by comparing the midpoint of Wells Fargo Securities valuation ranges to consensus fair value estimates, volatility adjusting the percentage difference, and ranking the resulting score.
- Upside: AEE, BEN, CCL, DVA, EIX, ES, EXC, FTR, HUM, INTC, JNJ, LNT, PEG, PNW, SCG, T, WEC, WU, XEL, XOM.
- Downside: ANTM, C, CI, COF, EQT, FOXA, FSLR, GS, KIM, LH, MON, MSI, MYL, NVDA, NWSA, SLG, TIF, TSO, UA, WLTW.
Sun, Jul. 10, 9:47 AM
- WellCare Health Plans (NYSE:WCG) and Centene (NYSE:CNC) have made competing offers for the Medicare Advantage insurance policies - covering about 350K people - that Aetna (NYSE:AET) plans to shed in order to acquire Humana (NYSE:HUM).
- Aetna presented the divestiture plan on Friday, when meeting with DOJ officials in a bid to address their antitrust concerns.
Fri, Jul. 8, 12:25 PM
- Anthera Pharmaceuticals (NASDAQ:ANTH) initiated with Buy rating and $10 (180% upside) price target by H.C. Wainwright.
- Ultragenyx Pharmaceutical (NASDAQ:RARE) initiated with Overweight rating and $70 (31% upside) price target by Piper Jaffray.
- Eiger Biopharmaceuticals (NASDAQ:EIGR) initiated with Outperform rating and $34 (85% upside) price target by Oppenheimer.
- Intercept Pharmaceuticals (NASDAQ:ICPT) initiated with Sell rating and $58 (61% downside risk) price target by Cantor Fitzgerald.
- Juno Therapeutics (NASDAQ:JUNO) initiated with Equal Weight rating and $48 (73% upside) price target by Barclays.
- Kite Pharma (NASDAQ:KITE) initiated with Equal Weight rating and $58 (21% upside) price target by Barclays.
- Endologix (NASDAQ:ELGX) upgraded to Outperform from Market Perform by BMO Capital. Price target raised to $16 (14% upside) from $11.50.
- Achillion Pharmaceuticals (NASDAQ:ACHN) upgraded to Outperform from Market Perform with a $13 (42% upside) price target by JMP Securities.
- Humana (NYSE:HUM) downgraded to Neutral from Overweight by JPMorgan. Price target lowered to $150 (8% downside risk) from $196.
- Ilumina (NASDAQ:ILMN) downgraded to Underweight from Equal Weight by Morgan Stanley. Price target lowered to $110 (22% downside risk) from $130.
- T2 Biosystems (NASDAQ:TTOO) downgraded to Sell from Buy by BTIG Research. Price target lowered to $4 (26% downside risk) from $12.
- Juno Therapeutics (JUNO) downgraded to Neutral from Overweight by JPMorgan. Price target lowered to $39 (40% upside) from $63.
- Depomed (NASDAQ:DEPO) downgraded to Neutral from Buy with $20 (6% upside) price target by UBS.
- Esperion Therapeutics (NASDAQ:ESPR) downgraded to Hold from Buy by WallachBeth.
Thu, Jul. 7, 12:55 PM
- Humana (NYSE:HUM) has tumbled, now down 7.8% in the past few minutes, on chatter that it and Aetna are to meet with the Justice Dept. to discuss "significant" concerns.
- Other insurers took a dip on the news. Aetna (NYSE:AET), set for a $37B takeover of Humana, has slid from positive ground to a 1.5% loss on the day. UnitedHealth (NYSE:UNH) is off 0.7%. Cigna (NYSE:CI) has fallen into the red, -0.4%.
- Reports had Aetna set to sell several billion dollars worth of assets to ease regulatory concerns over the deal.
Thu, Jul. 7, 12:45 PM
Fri, Jul. 1, 3:38 PM
- Aetna (AET -1.6%) is preparing to sell assets worth several billion dollars as it seeks to ease regulatory concerns over its proposed $37B takeover of Humana (HUM -2.3%), Bloomberg reports.
- The process is advanced and assets could be marketed to potential buyers within weeks, although any asset sale would be conditional on the completion of the merger, according to the report.
- The takeover has a higher probability of winning approval than reflected in market trading, says analyst Ira Gorsky, since the combination is easier to fix than the Anthem-Cigna deal because it is primarily about Medicare Advantage, which is based on distinct, local markets.
Thu, Jun. 23, 3:57 PM
- California's insurance commissioner urges national antitrust regulators to block Aetna's (AET +0.7%) proposed $34B takeover of Humana (HUM -0.2%), saying a merger would reduce competition in already heavily concentrated commercial health insurance markets in California and across the U.S.
- The commissioner also cites the negative impact on millions of seniors nationally who rely on Medicare Advantage, saying an Aetna-Humana combination would have 26% of all Advantage enrollees in the U.S., more than any other insurer.
- The statement comes just days after California's Department of Managed Health Care - the only regulatory agency in the state with official oversight of the deal - said it had approved the deal with conditions, including that AET hold down premium increases and invest $50M in communities.
Thu, May 26, 5:43 AM
- Stung by losses in Obamacare's first years, big health plans are looking for premium boosts of 20% or more in states like New York, Pennsylvania, and Georgia, and by more than 10% in places like Florida and Maryland.
- Among those published so far, only in Vermont do insurers' requests not hit the 10% level. Proposals, of course, need to be approved by state regulators.
- Also at issue - 2017 marks the year when some programs designed to cushion insurers' losses come to an end.
- While some state insurance commissioners are talking a tough game in regard to approving the requests, others say they are unable to deny the increases where an insurer has shown need, and they are required by law to ensure plans have enough funds to pay out claims.
- Among those looking for higher rates are Humana (NYSE:HUM) and Anthem (NYSE:ANTM).
Thu, May 12, 4:20 PM
- Hospital stocks took it on the chin today as bearish investors anticipate the potential softening of revenues after a federal judge ruled that the Obama administration is unconstitutionally spending money to reimburse health insurers for the extra cost of providing coverage to low-income Americans under the Affordable Care Act (ACA) without obtaining an appropriation from Congress.
- House Republicans sued Obama accusing the President of violating the law by delaying the enforcement of several provisions of the ACA. Lawyers later focused on the reimbursements, which could be as high as $175B over a decade according to Republicans. Predictably, administration attorneys say the suit should be dismissed because the House has no legal right to sue considering the reimbursements were authorized by law.
- Judge Rosemary Collyer, appointed by George W. Bush in 2002, issued an order stopping further reimbursements, but its implementation will be delayed until the appeal process runs its course.
- Related tickers: (CYH -10.8%)(HUM -2.5%)(HCA -3.2%)(HLS -1.5%)(KND -8.1%)(LPNT -3.3%)(THC -9.8%)(SSY -1.5%)
Wed, May 4, 7:57 AM
- Humana (NYSE:HUM) Q1 results ($M): Total Revenues: 13,800 (-0.2%); Premiums: 13,440 (+1.4%); Operating Expenses: 13,253 (+1.6%).
- Net Income: 234 (-45.6%); EPS: 1.56 (-44.7%); CF Ops: 482 (+350.5%). Consensus: EPS of $1.81 on revenues of $13.76B.
- Total Medical Membership (000s): 14,289.2 (+0.8%); Pharmacy Generic Fill Rate: 90.1% (+1.1%); Script Volume: 104,400 (+8.6%).
- 2016 Guidance: Revenues: at least $53.5B; EPS at least $8.32; Non-GAAP EPS at least $8.85.
- Q2 Guidance: EPS at least 2.06; Non-GAAP EPS at least $2.15.
- Q2 Consensus: EPS of $2.26 on revenues of $13.71B.
Wed, May 4, 7:34 AM
Humana, Inc. is a health care company that offers a wide range of insurance products and health and wellness services that incorporate an integrated approach to lifelong well-being. The company operates its business through the following segments: Retail, Employer Group, and Health and... More
Industry: Health Care Plans
Country: United States
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