HUM - Embedded Expectations Analysis - 2018 03 23
Humana Inc. (HUM:USA) currently trades near historical highs relative toUAFRS-based (Uniform) Assets, with a 2.2x Uniform P/B, implying bullish expectations for the firm. However, management has concerns about industry trends, their financial results, and investments
Specifically, management may lack confidence in the sustainability of strong
short-term results, and may be exaggerating the know-how of their primary care community. Moreover, they may have concerns about their ability to add more than 28,000 employees to incentive programs, and may be downplaying concerns about margin underperformance resulting from investments into benefit design. Moreover, they might be exaggerating their ability to reach their long-term margin targets through an acceleration of investments, and may lack confidence in their ability to reach their EPS growth target of 11% to 15%
Humana is a holding company. Through its subsidiaries, the company is a health and well-being company. The company manages its business with three segments: Retail, which consists of products sold on a retail basis to individuals including medical and supplemental benefit plans, such as Medicare and state-based Medicaid Contracts; Group and Specialty, which consists of employer group commercial fully-insured medical and specialty health insurance benefits, including dental, vision and life insurance benefits, as well as administrative services only; and Healthcare Services, which includes pharmacy solutions, provider services, clinical care services, and predictive modeling and informatics services
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