Humana's Q3 2024 Earnings: What to Expect

Louisville, Kentucky-based Humana Inc. (HUM) provides medical and specialty insurance products in the U.S. Valued at a market cap of $31.6 billion, the company operates pharmacies and senior-focused primary care centers and offers home solutions services. It is expected to announce its fiscal Q3 earnings results before the market opens on Wednesday, Oct. 30. 

Ahead of this event, analysts expect the healthcare company to report a profit of $3.48 per share, down 55.3% from $7.78 per share in the year-ago quarter. The company has surpassed Wall Street's earnings estimates in three of the last four quarters while missing on another occasion.

In Q2, the company’s adjusted EPS of $6.96 outpaced the consensus estimates by 18.2%. The EPS surprise can be attributed to strong premium growth and increased service revenues, driven by expanding medicare advantage membership and an improved primary care business.

For fiscal 2024, analysts expect HUM to report an EPS of $16.06, down 38.4% from $26.09 in fiscal 2023. Nevertheless, EPS is expected to grow 22.6% year over year to $19.69 in fiscal 2025.

Shares of HUM have declined 43.3% on a YTD basis, significantly lagging behind both the S&P 500 Index's ($SPX) 22.7% rise and the Health Care Select Sector SPDR Fund’s (XLV) 10.2% return over the same period.

In the first week of October, shares of HUM plunged 25.4% due to losing high-quality ratings on its major Medicare Advantage plans, which slashed its membership from 94% to around 25%, triggering investor confidence and leading to its massive stock sell-off. Moreover, the stock has been underperforming due to significant headwinds, including declining membership, rising operating expenses, and increasing debt levels. 

On Jul. 31, shares of HUM closed down 10.6% despite reporting better-than-expected Q2 earnings results. Along with its adjusted earnings, its adjusted revenue of $29.4 billion surpassed the Wall Street estimates of $28.63 billion and improved 14.2% from a year ago. However, the company’s lowered full-year 2024 GAAP EPS guidance and 22.1% year-over-year decline in adjusted EPS might have dampened investor confidence. 

Yet, analysts' consensus view on Humana’s stock is moderately optimistic, with a "Moderate Buy" rating overall. Among 24 analysts covering the stock, six recommend a "Strong Buy," one suggests a "Moderate Buy," 16 indicate a “Hold,” and one suggests a “Moderate Sell.” This configuration is less bullish than three months ago, with 10 analysts suggesting a "Strong Buy." 

The average analyst price target for HUM is $307.45, indicating a nearly 19% potential upside from the current levels.

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On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.