Jefferies Reduces Price Target on Humana

Jefferies has decreased its price target on Humana

following 2011 guidance that was lower than expected. In a note to clients, Jefferies writes, "'11 EPS guidance range of $5.35-$5.55 was 12% below our est. Consistent with its historical approach, Humana bids its MA plans according to its 15% Solution (underwriting margin) target. Thus, guidance is based on a 5% Medicare margin in '11 from 6.5% in '10. Commercial medical cost trends reverting to normal levels also cut into EPS. These two factors alone are a $1.20 EPS drag." Jefferies is lowering their 2011 revenue and EPS estimates by 2% and 10% respective and they are reducing their price target from $65 to $61. HUM is trading at $56.81.