Humana (HUM) is one of the largest publicly traded health benefit companies in the U.S. and Puerto Rico. The company reported better-than-expected net income of $243M (up 57% y/y) or EPS of $1.43, and a medical expense ratio (MER) of 80.3% (down 290 basis points y/y).
Consolidated 4Q07 revenue was $6,339M, up 12% y/y, buoyed by a 12% y/y increase in total premium and administrative services fees, a lower than previously anticipated income tax rate, and a gain from the sale of a venture capital investment during 4Q07.
We retain our Hold recommendation on the stock at current levels. We have valued HUM on a forward price/earnings (P/E) basis, as well as a comparison to similar firms in the managed care sector. Our $77 price target represents a P/E multiple of 13.9x FY08 EPS of $5.55 and underpins our Hold rating.
Read the full analyst report on HUM.
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