Shares of health insurance and well-being company Humana (NYSE:HUM) have remained resilient to the sharp selloff in the equities this year. It is trading in the green, compared to the 19% decline in the S&P 500 (SPX) Index. Other than its ability to defend its market share, the company's durable earnings and strong visibility over future growth keep Wall Street analysts bullish on HUM stock.
Humana Projects Strong Earnings Growth
During the recently held virtual Investor Day, Humana raised its Fiscal 2022 earnings outlook. It expects to deliver adjusted earnings of approximately $25, up from the previous guidance of $24.75. Furthermore, the new earnings forecast reflects solid 21% year-over-over growth.
Humana’s upbeat earnings outlook is based on lower-than-expected medical cost trends, primarily in its Medicare Advantage and Medicaid businesses. Further, the absence of COVID-led headwinds are expected to cushion its earnings.
Humana also introduced a new adjusted earnings target for the medium term. It expects to deliver adjusted earnings of $37 per share for Fiscal 2025, which represents a CAGR of 14% over the updated 2022 guidance.
Further, Humana expects its enterprise earnings to increase about 10% annually. Operating leverage and benefits from capital investments in the business are expected to support the growth.
What Is the Forecast for Humana Stock?
HUM’s average price forecast of $534.15 implies 7.4% upside potential. Further, HUM stock sports a Strong Buy consensus rating on TipRanks based on 10 Buys and three Holds.
Hedge funds are also optimistic about HUM stock. They bought 116.9K HUM shares in the last quarter. Further, 4.8% of retail investors (with portfolios on TipRanks) increased their exposure to HUM stock in the last 30 days.
Overall, HUM stock scores a ‘Perfect 10’ on TipRanks, implying that it is more likely to beat the broader market.
Bottom Line
Humana’s strong earnings base and solid guidance should support its stock price in the coming years. Further, the expansion of Medicaid membership, lower utilization trends in its core individual Medicare Advantage business, higher per member premiums, and investments in marketing augur well for its future growth.
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