What made Humana stock lose 10% on Tuesday?

By:
on Apr 2, 2024
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  • U.S. decided against increasing payments for Medicare Advantage plans.
  • Jefferies analyst Andrew Mok sees downside in Humana stock to $310.
  • $HUM is currently down well over 30% versus the start of this year.

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Humana Inc (NYSE: HUM) is down nearly 10% this morning after the U.S. regulators decided against increasing payments for Medicare Advantage plans.

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Humana investors were hoping for a bigger increase

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The Centers for Medicare and Medicaid Services, on Tuesday, announced an average increase of 3.7% in private Medicare plans revenue for 2025.

While the increase did come in line with what was proposed in January – investors were hoping the government would go a bit higher. According to Mike Tuffin, chief executive of AHIP:

These policies will put even more pressure on the benefits and premiums of 33 million Medicare Advantage beneficiaries who will be renewing their coverage this fall.

Humana stock that currently pays a dividend yield of 1.01% is now well over 30% versus the start of 2024.

Is Humana stock worth owning in 2024?

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Humana Inc is taking a hit also because a Barclays analyst reiterated his “hold” rating on shares of the health insurer on Tuesday.

Andrew Mok sees further downside in $HUM to $310 as slowing senior growth, increasing cost trend, and reimbursement challenges “make the MA investment care less compelling now than at any point in the last ten years”.

The New York listed firm is scheduled to report its financial results for the first quarter in the final week of April. Consensus is for it to earn $6.05 a share versus a much higher $9.38 per share a year ago.

Note that Humana shares are not the only in the red today. Other health insurers including UnitedHealth and CVS Health are down at writing as well.  

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