UPDATE: J.P. Morgan Upgrades Human to Overweight on Expected Potential Upside
In a report published Monday, J.P. Morgan analyst Justin Lake upgraded the rating the Humana (NYSE: HUM) from Neutral to Overweight, and raised the price target from $88.00 to $91.00.
In the report, Lake noted, “Our previous HUM earnings estimates were higher but clearly it has been tough to have confidence given uncertain membership/margin trajectory. We now assume 100bps of margin contraction in Med Adv over next two years and modest member growth before reaccelerating in 2016. As mentioned above, however, we expect potential upside here in a number of ways and note our est. have EPS potential upside from capital deployment as well both in terms of deploying cash-flow as well as underlevered balance sheet. With the stock having underperformed peers meaningfully we see an increasingly positive risk-reward profile over a multi-year period. Our $91 price target assumes an 11x multiple off our new 2014 EPS estimate.”
Humana closed on Friday at $73.93.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Tags: J.P. Morgan