Humana Touches New 52-Week High on Favorable Developments - Analyst Blog

On Jun 25, 2014, shares of Humana Inc. HUM reached a new 52-week high of $129.14, after a series of positive tidings for the company.

The stock gained 51.86% in the one-year period. Moreover, Humana's year-to-date return of 24.92% was higher than the S&P 500's return of 6.00% and that of the other industry players, with UnitedHealth Group Incorporated UNH, Aetna Inc. AET and WellPoint Inc. WLP recording returns of 9.34%, 20.21% and 17.69% respectively.

Earlier this month, Humana entered into a new Accountable Care agreement with one of the major academic health systems of the nation, UC San Diego Health System. The agreement will help Humana cater to the needs of the Medicare Advantage members in San Diego. This news stimulated bullish sentiment on the stock, as the move marked Humana's relentless effort to provide quality healthcare at an affordable price to medical members.

Last month, the company has inked a deal with the University General Health System, Inc. to enhance the services provided to Humana's members in Houston. As per the deal, Humana's members will be able to access University General Hospital's doctors and services like inpatient, outpatient and emergency services. In other words, the contract extends the in-network benefits to these members.

Hence, both the aforementioned deals were aimed to widen Humana's range of services. Furthermore, the company at the same time was ranked as the number one company in the athenahealth PayerView Rankings this month, for its ease in doing business with providers. Accolades like these enhance the goodwill of the company and thus, boost customers' confidence in the stock.

Last month, Humana reported first-quarter 2014 earnings that surpassed the Zacks Consensus Estimate by 21.13%. Notably, this health and well-being company delivered positive earnings surprises in three of the last four quarters with an average beat of 5.25%.

Since the company reported first-quarter earnings, the Zacks Consensus Estimate for 2014 increased 0.13% to $7.84 per share while for 2015, it increased 0.34% to $8.85 per share.

Currently, Humana carries a Zacks Rank #2 (Buy).
 

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