Company Overview: Humana Inc. is a leading health and well-being company based in Louisville, Kentucky, primarily known for its Medicare-focused offerings. The company provides a range of health insurance services, including Medicare Advantage plans, group insurance, and healthcare services. Its emphasis on integrated care and value-based programs aims to improve patient outcomes and reduce healthcare costs, making it a critical player in the U.S. healthcare system.
Recent Developments: Humana’s stock has recently been under severe pressure due to the loss of a key Medicare plan’s star rating. This development is particularly concerning because it’s expected to result in a significant reduction (around 16% which needs further verification) in payments from affected clients by 2026, triggering a sharp sell-off in the stock. The loss of Medicare ratings can be a huge blow, as these star ratings directly impact reimbursements from the government, which is a critical revenue stream for the company.
Strengths:
- Strong Medicare Advantage Business: Humana remains one of the largest providers of Medicare Advantage plans in the U.S. This business segment has shown consistent growth due to aging demographics and increased enrollment.
- Focus on Value-Based Care: The company has been a pioneer in value-based care, which aligns healthcare provider incentives with patient outcomes. This strategy could offer long-term benefits as the healthcare system continues to move toward outcomes-based models.
- Diverse Revenue Streams: While Humana is known for Medicare, it has diversified into areas such as pharmacy services, home healthcare, and group insurance. This diversification can help mitigate risks from regulatory changes in Medicare.
- Solid Financials: Despite the current challenges, Humana has a history of strong cash flow generation and solid balance sheets, which allows for continued investment in growth areas like value-based care and healthcare services.
Weaknesses:
- Regulatory Risk: As a company heavily reliant on government programs, any regulatory changes, like the recent star rating loss, can significantly impact revenue and profitability. The healthcare landscape is often volatile due to political shifts, which can pose risks for Humana.
- Rising Competition: Humana faces stiff competition from other healthcare giants like UnitedHealth Group and Anthem. Competitors are constantly innovating and expanding, potentially eroding Humana’s market share.
- Medicare Star Rating Loss: The recent downgrade in the star rating of one of its Medicare plans could lead to a substantial reduction in government payments. This will hurt revenue and may impact customer retention if individuals seek plans with higher ratings.
- Dependence on Medicare Advantage: While the Medicare Advantage segment is a strength, over-reliance on it makes the company vulnerable to any changes in the Medicare reimbursement model or government funding decisions.
Technical Analysis: Humana’s stock has been in a downtrend recently, with significant selling pressure following the announcement of its Medicare rating downgrade.
- Moving Averages: The stock is trading below key moving averages, such as the 50-day and 200-day moving averages, which indicates bearish momentum in the short to medium term.
- RSI (Relative Strength Index): The RSI is now in oversold territory at the time of writing, suggesting that a potential short-term bounce could occur. However, this may be part of a larger bearish trend unless new positive catalysts emerge.
- Support and Resistance Levels: The stock could find support at previous lows especially its Covid lows, but if those levels are breached, there may be further downside risk. Resistance will likely come at the moving averages mentioned earlier including the gap fill.
- MACD (Moving Average Convergence Divergence): The MACD indicator shows a bearish crossover, indicating continued downward momentum. This could mean the stock will face further selling pressure in the near term.
Conclusion for Long-Term Investors: Humana’s current situation presents both risks and opportunities for long-term investors. While the loss of its Medicare star rating is a significant setback, the company’s strong market position in the growing Medicare Advantage sector and its strategic focus on value-based care could provide upside in the future.
However, with the stock selling off heavily and showing bearish technical indicators, caution is warranted. Long-term investors might consider waiting for further clarity on how the star rating loss impacts future earnings and whether the stock finds technical support before entering a position. Alternatively, some investors might see this downturn as an opportunity to buy into a leading healthcare company at a discount, betting on its ability to recover in the long run.
Monitoring regulatory updates and the company’s response to the Medicare issue will be crucial for any investment decisions.
Kept Easy is long Humana. This post is generated due to the recent pressures on Humana’s price and updating its current analysis in an effort of seeing whether we buy, sell or hold. We are currently buying some more Humana to average our cost down. Our current average cost at time of writing is $276.73. We are not required to file our activity or disclose the size or our position.
Kept Easy Quantitative Fundamental Analysis
*Mayer Performance Score = 4.25 out of 8
The Mayer Performance Score suggests the performance of the stock, its share price, and potential for gains is solid. Anything above 4 is a strong score. Due to the recent price action this score remains strong to the volatile nature of its price and recent and long term price appreciation as opposed to short term price fluctuations.
**Grade Of Company = Diamond Status (Diamond Status is the 1st ranked grade, its the top grade)
Dividend Grade = Diamond Status
Strength Grade = Diamond Status
Growth Grade = Diamond Status
Health Grade = B
Power Grade = Diamond Status
Risk Grade = A
Value Grade = Diamond Status
The Kept Easy QFA grading system suggests Humana is not only investable but a candidate for being a top pick and main stock. This is based on the financials and the sustainability, not current sentiment or short term price action.
Kept Easy requires an A- or better in order to invest based on Fundamentals and financial statements.
Closing Price October 2, 2024 $279.45
*** Stock Price Is Currently Fair
Fair Share Price High Range $356.74
Fair Share Price Low Range $251.82
The Kept Easy valuation score suggests that Humana is fairly priced fundamentally. This doesn’t not take into account sentiment or news.
**** Price Forecast 1 = $641.87
Price Forecast 2 = $282.46
Price Forecast Combined = $427.03
The Kept Easy price forecast takes two different techniques into forecasting and combines them for a main number. The price forecast suggests Humana has a lot of room to go up. The timeline of the forecast is 1 year out from the date of running the analysis. Therefore August 9, 2025 the analysis is showing the price will be $427.03. This calculation does not include any future events or news or changes that may happen.
Average Annual Gain Percent 1.0775930252550772
3 Year Annual Gain Percent -9.751054852320676
5 Year Annual Gain Percent 1.6972708567879202
10 Year Annual Gain Percent 11.286563071297987
15 Year Annual Gain Percent 41.07807961729027
20 Year Annual Gain Percent 68.00156739811912
Humana’s gain percent is fairly solid although has struggled due to recent sell off on its three year gain percent. This shows the performance over the last 20 years on an annual basis from the date of running the analysis is solid. While past performance is not an indication of the future, their annual gain percent over most time periods especially those longer, instills confidence.
Periods Net Income Increased 4 out of 12
Periods Cash Increased 8 out of 12
Periods Revenue Increased 10 out of 12
Periods Gross Profit Increased 8 out of 12
Humana shows good increases in most key categories however their net income could be better.
What a Kept Easy Investor has to say…
Humana is one of our top picks in the US Health Sector.
Diamond Status companies can be fairly rare in our QFA, this means in general its financials and sustainability are at the upper echelon of S&P 500 companies.
Quantitively when looking at the long term Humana is super strong and a near sure bet in the risky game of stocks. Not only that you get paid a Dividend along the way.
In general there’s not much bad to say about Humana when removing the current and recent price action and Medicare news of lower star ratings and less revenue.

When you look at a chart you can see that it is currently testing near Covid lows. That is crazy low for such a company and likely extremely over done. Many investors have a sell first ask questions later mentality. When accompanied by an ex dividend date, a moment nearly all companies reprice themselves lower to make up for the dividend payment, this can further exacerbate any sell off.
The RSX is currently under 30 and the RSI is currently under 30. This indicates either being oversold or extreme negative sentiment or both.
Humana is well under its 100 week moving average and has been for awhile.
It is also now well below the 200, 50 and 10 exponential moving averages.
Technically this is really bad other than being near strong support at Covid lows.
A sustained time below the covid lows is likely indication of something deeper the public is unaware of that is far beyond an extremely over exaggerated reaction to bad news.
There is a chance however that the calculations done to downgrade Humana’s star rating in one of its Medicare plans was incorrect. If they fight it and it ends up being accurate, Humana would most likely pop and go up a lot.
Wall Street is always pricing ahead, the future price of a stock. Their adjustments will show a certain price level and the market will adjust to that price. Once the market has priced in the loss of 2026 revenues, it will then look at other factors especially new information to then reprice the stock again.
Its highly probable that this current sell off is over done and the price retraces to either the 10 ema, 50 ema or at least fills the gap back up.
With a grade of Diamond Status, a decent dividend for a US health company and its solid position as a leader in the US healthcare game, Kept Easy feels its still a good investment but that definite risks are present.
Since it was already a stock being held by us (Cost average was $305ish), we have chosen to endure this momentary inferno and add to our position.
We would however not recommend taking our lead and risking your capital on what we say. We would instead urge you to do your own due diligence and merely use this information as part of your overall thesis. Its likely at the very least at levels under $300 you’ll make money whether its a trade or an investment.
FOOTNOTES
* The Mayer Performance Score is a proprietary scoring system created by Justin Mayer the Founder of Kept Easy. It is based on various factors that are tied into the performance of the stock. Its premise is to rank and compare companies on metrics that contribute to the price of the stock. It is meant to help find companies who’s’ share price is likely to go up.
** QFA Company Grades = Diamond Status, Gold AAA, Gold AA, Gold A, A+, A, A-, B+, B, B-, C+, C, C-, D+, D, D-, F
The company grades are based on a combination of factors Dividend, Strength, Growth, Health, Power, Risk, Value. These contribute to the overall grade of the company. Each are proprietary algorithms based on the accounting books and public filed numbers of the company, except for Risk. Risk is calculated using Sustainalytics Home – Sustainalytics scores where an algorithm is applied to the combined scores of environmental, societal and governmental risk factors. It is important to note that the sentiment and macro news at this point is not included in any valuation score.
*** Maybe Expensive Share Price High Range 648.6266924564798
Maybe Expensive Share Price High Range 563.2810750279955
Pricey Share Price High Range 563.2810750279955
Pricey Share Price Low Range 475.65957446808517
Maybe Pricey Share Price High Range 475.65957446808517
Maybe Pricey Share Price Is 356.74468085106383
Fair Share Price Is 356.74468085106383
Fair Share Price Is 251.81977471839798
Undervalued Share Price Is 251.81977471839798
Undervalued Share Price Is 225.31243001119822
Way Undervalued Share Price Is 251.81977471839798
Way Undervalued Share Price Is 225.31243001119822
The Kept Easy valuation score finds ranges of prices that help to better understand the current value of the company. This is a comprehensive score that combines various numbers all based on the accounting books of the company including but not limited to P/E. This valuation is fundamental only and does not include sentiment or news.
Disclaimer
Our QFA is based upon corporate accounting numbers made available to the public. We use Alpha Vantage for the majority of our data. Out QFA is written in Python using this data and computed with various code. We do not currently verify the accuracy of the Alpha Vantage data for every company all the time. We do our best to ensure the data we use and make public is perfect and accurate however occasionally some errors do occur. Our code may contain errors we have yet to catch that is printing out incorrect numbers and thus the data presented in the Kept Easy Quantitative Fundamental Analysis should be confirmed with the companies actual financial statements and used with other techniques to ensure a balanced approach to investing. Kept Easy uses this Fundamental Analysis when Investing and Swing Trading its real money.
Kept Easy is not a short seller.
Chat GPT was used as an assistant for some of this blog article. Only information Kept Easy deems accurate is used however we do not allow bias or remove unwanted opinion. While Kept Easy does its best to ensure all data and information is accurate, there is a chance something was overlooked. Please keep this in mind when making decisions and to always verify data and information before making any decisions based on it.