U.S. health insurance firm Humana is the only major stock from around the world to have risen by more than 10% every year for the past decade. CNBC Pro screened over 85,000 global equities and found that Humana was the only stock to have posted such consistent returns since January 2013. Founded in 1961 in Kentucky, the company was launched as a nursing home. It has since evolved, pivoting into hospitals before finding its niche in health insurance in the 1980s. Today, Humana has become one of the largest providers of U.S. government-sponsored “Medicare Advantage” health insurance plans. The share price returns of the company have been stable historically with the exception of 2012 when the stock tanked by 20%, partly over losses incurred from regulatory changes made 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 — had almost doubled that year. However, the stock rebounded with a 52% gain the following year, providing investors with double-digit returns every year since. The health insurer’s shares also outperformed the broader market in 2022 and 2018, when the S & P 500 turned negative on both occasions. This year, Humana’s shares have underperformed the broader market by staying flat, while the U.S. benchmark index is up nearly 14%. Looking forward, the consensus price target of 24 analysts covering the stock, which trades as HUM on the NYSE, points towards a 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 are saying: Deutsche Bank Equity analyst George Hill bumped up the bank’s price target to $568 (10% upside) on April 26. “We also note that Humana has almost no consumer-related risk and few recessions related risks, making it the rare growth stock that’s not correlated to most growth stocks.” JP Morgan Lisa Gill on April 26 reiterated the bank’s overweight rating with a $505 price (1.2% upside) target. “Despite some concern over potential M.A. cost pressure heading into the quarter, HUM delivered a solid result, and we believe the outlook for the remainder of the year is sufficiently conservative as the company is guiding to FY23 MLR in the upper half of its full year range.” UBS Kevin Caliendo reiterated the Swiss bank’s buy rating and a price target of $620 on April 26. “We continue to think HUM is well positioned for outsized [Medicare Advantage (M.A.)] growth in 2024 and beyond thanks to its enviable positioning in attractive growth markets and industry leading Stars scores.” RBC Capital Markets Ben Hendrix retired the bank’s outperform rating and price target of $637 on April 27. “We believe recent investments in benefits have resulted in superior competitive footing as HUM heads into M.A. bidding for 2024, and that the company should be well positioned to continue to gain share as shopping behavior picks up among M.A. consumers.” Humana is also Morgan Stanley’s top pick in the “Healthcare Facilities & Managed Care” sector. The investment bank maintains an “in-line” or hold rating on the stock with a price target of $637. Jefferies’ analysts raised their price target to $614 with a buy-rating on April 27.
