4. Humana Inc. (NYSE:HUM)
Number of Hedge Fund Holders: 74
Humana Inc. (NYSE:HUM) is dedicated to enhancing health and well-being by providing healthcare benefits to its medical and specialty members. Its extensive range of services includes fully-insured medical and specialty health insurance benefits such as vision, dental, and supplemental health benefits, along with administrative services only (ASO) products for individuals and employer groups. Additionally, the company offers healthcare services tailored to retired and active duty military personnel and their dependents.
Cantor Fitzgerald recently adjusted its price target for Humana Inc. (NYSE:HUM) to $360 from the previous target of $391 set in April, while maintaining a Neutral rating on the stock. This revision follows Humana’s first-quarter earnings report, which surpassed expected financial metrics. Humana reported an EPS of $7.23 for Q1 2024, exceeding the FactSet consensus of $6.12. The company’s revenue reached $29.6 billion, surpassing the expected $28.5 billion. Humana Inc. (NYSE:HUM)’s medical loss ratio (MLR), a critical measure of the amount spent on medical claims relative to the insurance premiums collected, was 89.3%, slightly higher than the consensus of 88.9%.
Despite these positive results, there are concerns about the lack of clarity regarding the company’s outlook for 2025 and the degree of conservatism in its reserve assumptions. Cantor Fitzgerald analysts pointed out that although Humana Inc. (NYSE:HUM) has maintained its full-year MLR at 90% and its EPS forecast at approximately $16, there remains some uncertainty about the new guidance for 2025.
According to Insider Monkey, 30 out of the 919 hedge funds tracked reported owning stock in Humana Inc. (NYSE:HUM) as of Q1 2024. Among the top hedge fund investors in the company, Citadel Asset Management held a notable stake valued at over $372.4 million.
Diamond Hill Large Cap Strategy stated the following regarding Humana Inc. (NYSE:HUM) in its first quarter 2024 investor letter:
“Among our bottom Q1 contributors were real estate investment trusts (REITs) Extra Space Storage and SBA Communications, as well as Humana Inc. (NYSE:HUM. Shares of health insurance company Humana were meaningfully pressured in late 2023 against a backdrop of accelerating medical costs among its Medicare population, weighing on health plan profitability. Further, since Medicare Advantage plan pricing is set in June of each year for the following year, Humana is unable to offset increased medical costs with higher pricing — which in turn pressured shares in Q1. Nevertheless, we anticipate Humana will be able to improve margins over the next several years and maintain our conviction in our position.”
