Bargain Hunters, Rejoice: Analyst Unveils Undervalued Humana Stock, Kicks Off Coverage - Humana (NYSE:HUM)

Cantor Fitzgerald initiated coverage on 15 companies in the Healthcare Services sector. The analysts have a favorable view of payors, acute, outpatient, FemTech, brick-and-mortar alternatives, and opioid abuse treatment centers.
The analysts have a neutral view on home health and a negative view on inpatient psych. The next few years hold challenges for the payors and acute sectors.
Cantor initiated coverage on Humana Inc HUM with an Overweight rating and a price target of $597.
The analyst views the stock as undervalued, given multiple levers of upside to management's guidance of 14% EPS CAGR 2022-2025, including potential Medicare Advantage (MA) share gains and CenterWell revenue synergies, which could lift core earnings growth above 10%.
It sees an upside potential to 2023 guidance and 2024 consensus estimates driven by MBR (medical benefit ratio) improvement as a better sales channel mix and comparatively favorable provider negotiations drive better quality in Humana's MA book.
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Humana is also well cushioned from potential 2023/2024 provider pricing pressure on network contract renewals.
Price Action: HUM shares are up 0.27% at $491.65 on the last check Friday.