Jefferies Comments On Humana Strong Results

According to Jefferies, Humana HUM strong results and guidance depict solid execution against strategy, in combination with favorable utilization tailwinds. Jefferies said that stock action has decoupled, at least temporarily, from fundamentals in managed care. The market is stretching to overweight macro concerns and uncertainty compared to the strong fundamental performance. “HUM is trading at 9.5x 2011 and 2012 EPS, well below its historical average of 12.1x. Risks: 1) MLR rebates related to Commercial business, 2) HC Reform with respect to Medicare Advantage, 3) political and regulatory risk, 4) RADV audit, and 5) unexpected increase in utilization.” Humana closed yesterday at $72.36.