Global Courant
US health insurance company Humana is the only major stock in the world to grow more than 10% every year for the past decade. CNBC Pro screened more than 85,000 global stocks and found that Humana was the only stock to post such consistent returns since January 2013. Founded in 1961 in Kentucky, the company was launched as a nursing home. It has since evolved and expanded into hospitals before finding its niche in health insurance in the 1980s. Today, Humana is one of the largest providers of US government-sponsored “Medicare Advantage” health insurance plans. Returns on the company’s stock price have historically been stable, with the exception of 2012, when the stock plummeted 20%, in part due to losses from regulatory changes following the introduction of the Affordable Care Act, or Obamacare. The company reported that its Medical Loss Ratio (MLR) — a measure of premiums spent on patient costs — nearly doubled that year. However, the stock rebounded with a 52% gain the following year, helping investors earn double-digit returns every year since then. Also in 2022 and 2018, when the S&P 500 turned negative both times, health insurance company shares outperformed the broader market. This year, shares of Humana underperformed the broader market by holding flat, while the US benchmark index rose nearly 14%. Looking ahead, the consensus price target of 24 analysts covering the stock, which trades as HUM on the NYSE, points to 19% upside potential over the next 12 months, according to FactSet. HUM 1Y line Most analysts are bullish on the company’s stock. Here’s what some say: Deutsche Bank Equity analyst George Hill raised the bank’s price target to $568 (10% up) on April 26. the rare growth stocks that are not correlated with most growth stocks.” JP Morgan Lisa Gill on April 26 reiterated the bank’s overweight with a price target of $505 (up 1.2%). “Despite some concerns about potential pressure on the MA costs leading up to the quarter, HUM delivered a solid performance and we believe the outlook for the remainder of the year is suitably conservative as the company heads to FY23 MLR in the top half of the full year.” range.” UBS Kevin Caliendo reiterated the Swiss bank’s buy rating and $620 price target on April 26. markets and leading Stars scores.” RBC Capital Markets Ben Hendrix retired the bank’s outperform rating and $637 price target on April 27. We continue to gain market share as MA consumer shopping picks up.” Humana is also Morgan Stanley’s first choice in the Healthcare Facilities & Managed Care sector. The investment bank maintains an “in-line” or hold rating for the stock with a price target of $637. Jefferies analysts raised their price target to $614 with a buy rating on April 27. — CNBC’s Michael Bloom contributed to this report.
