HUM

Humana Inc.

Healthcare, Event Driven/Special Sit


Presented:03/25/2022
Price:$435.54
Cap:$56.19B
Current Price:$257.60
Cap:$31.02B

Presented

Date03/25/2022
Price$435.54
Market Cap$56.19B
Ent Value$72.99B
P/E Ratio19.21x
Book Value$124.84
Div Yield0.64%
Shares O/S129.01M
Ave Daily Vol1,340,996
Short Int1.14%

Current

Price$257.60
Market Cap$31.02B
Humana Inc. engages in the provision of health insurance services. The firm operates through the following segments: Retail, Group and Specialty and Healthcare Services. The Retail segment consists of products sold on a retail basis to individuals including medical and supplemental plans such as Medicare, and State-based contracts. The Group and Specialty segment contains employer group fully-insured commercial medical products and specialty health insurance benefits marketed to individuals and groups, including dental, vision, military services and other supplemental health & voluntary insurance. The Healthcare Services segment offers services such as pharmacy solutions, provider services, clinical care, predictive modeling and informatics to other Humana businesses, as well as external health plan members, and other employers. The company was founded by David A. Jones, Sr., and Wendell Cherry on August 18, 1961 and is headquartered in Louisville, KY.

Publicly traded companies mentioned herein: Humana Inc (HUM), UnitedHealth Group Inc (UNH)

Highlights

The presenter is long shares of Humana Inc (HUM), the third largest health insurance agency in the US and the largest pure-play managed care company. The company has been steadily taking share alongside its peer United and should continue to outgrow the sector as it passes through rising prices, expands net margins, and cuts over $1B in costs to deleverage the business and revamp its Medicare Advantage business. The presenter believes there is a credible case for the stock to close the 5x EBITDA valuation discount to United’s 18x. Applying 20%+ EPS growth this year on the back of margin expansion and narrowing the valuation discount by half leads him to a price target of $500+ in the next 9 months. Longer term, he sees an opportunity to continue growing EPS 15%+ annually and for the stock to trade at parity to United.

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Idea Discussion

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