Humana Declines 7.4% on Mixed Q3 Results, Lowered Guidance

Shares of health insurance service provider Humana, Inc. (HUM) were down 7.4%, at the time of writing, in the early trading session on Wednesday after the company reported mixed third-quarter 2021 results and lowered the outlook for 2021.

The Kentucky-based company provides medicare benefits, state-based medicaid contracts, employer group commercial medical insurance products and specialty health insurance benefits, among others.

Adjusted earnings per share (EPS) stood at $4.83, beating the Street’s estimate of $4.66. The company had reported EPS of $3.08 in the third quarter of 2020.

Revenues rose to $20.7 billion from $20.1 billion in the same quarter last year. The figure marginally fell short of analysts’ expectations of $20.91 billion. (See Insiders’ Hot Stocks on TipRanks)

The President and CEO of Humana, Bruce D. Broussard, said, “Despite pandemic-related impacts, Humana had a strong third quarter, which we attribute largely to the strength of our Medicare Advantage (MA) offerings, highlighted by our individual MA membership expected to grow 11% year-over-year, ahead of industry expectations.”

Guidance Lowered

The company has lowered its guidance for the full year due to higher-than-expected COVID-19 costs during the third quarter.

It now expects to report adjusted EPS of $20.50 against the earlier guidance range of $21.25 to $21.75. Meanwhile, the Street’s EPS estimate for 2021 stands at $21.52.

Humana also expects individual MA membership growth of 11% year-over-year to 450,000 for 2021.

Analyst Recommendation

Overall, the stock has a Strong Buy consensus rating based on 7 unanimous Buys. The average Humana price target of $488.71 implies 6.9% upside potential. Shares have gained nearly 11% year-to-date.

Smart Score

According to TipRanks’ Smart Score rating system, Humana scores an 8 out of 10, suggesting that the stock is likely to outperform market averages.

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