Humana (Buy, TP: SEK78.00) - Set for 2018 FCF recovery
2017 has been a transition year for Humana, so we expect the Q3 results (due on 16 November) to be a non-event, with -0.9% organic sales growth YOY and a 150bp adjusted EBIT margin contraction to 8.0%. With management saying initiatives are in place for a reversal of trends in 2018, focus has shifted from near-term adjustments to the attractive valuation and strong mid-term outlook, and we see a strong FCF generating case evolving for 2018–2019. We reiterate our BUY recommendation and target price of SEK78.Humana AB is a Sweden-based care provider. It operates through four segments: Individual & Family, Personal Assistance, Elderly Care and Other Nordics. The Individual & Family segment provides psychosocial disorders and mental illness care. The Personal Assistance segment provides personal assistance to people with functional disabilities. The Elderly Care segment provides housing for the elderly. The Other Nordics segment covers the Company's developing market operations in the area. It operates in Sweden, Norway, Finland and Denmark.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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