Humana (HUM) Springs To Life On Raised FY22 Guidance And An Upbeat FY25 EPS Forecast
2:31 pm Thursday, September 15th, 2022
Humana (HUM), one of the largest U.S. health insurers, is springing to life today after lifting its FY22 earnings guidance to $25.00 during its Investor Day presentation, a 25-cent improvement from its prior forecast and $1.00 higher than its initial outlook in early February. HUM mentioned that due to a lack of COVID-19 headwinds materializing, it is releasing a $0.50 explicit headwind embedded in its prior FY22 projection. Other benefits, such as lower-than-expected medical cost trends in HUM’s Medicare and Medicaid businesses, also contribute to its FY22 guidance.
Another notable highlight from Investor Day was HUM detailing its expectations of 14% compounded annualized earnings growth going forward, resulting in adjusted EPS of $37.00 in FY25.
We also think the strongly favorable reaction today is being fueled by investors breathing a sigh of relief after health insurance giant Centene’s (CNC) comment yesterday. During its presentation at a global healthcare conference yesterday, CNC stated that its recent loss of a couple of significant requests for proposals (RFPs) in California would be a meaningful unanticipated headwind to its FY25 projections.
Overall, HUM’s FY25 earnings target is attainable, especially with COVID-19 headwinds dissipating. However, deferred care remains a risk that could get in the way of HUM reaching $37.00 in adjusted earnings in FY25. Nevertheless, a normalization of the economy post-pandemic should provide a steady tailwind for HUM as it works to achieve its new long-term earnings goal.
