Humana Stock Near Crucial Support – Buy Signal?
Humana (HUM) stock should be on your watchlist. Here is why – it is currently trading in the support zone ($184.31 – $203.71), levels from which it has bounced meaningfully before. In the last 10 years, Humana stock received buying interest at this level 4 times and subsequently went on to generate 43.5% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 3/1/2017 | 8.7% | 91 |
| 5/31/2017 | 4.5% | 35 |
| 7/26/2017 | 11.1% | 93 |
| 11/15/2017 | 149.8% | 1814 |
Yet, a support zone alone isn’t enough; rebounds are more likely when fundamentals, sentiment, and market conditions line up. How does that look for HUM?
Unlikely: MA rate shock impacts core profitability.
Humana’s near-term rebound is significantly hampered by the proposed 0.09% Medicare Advantage (MA) rate increase for 2027, essentially a cut given 8-9% medical cost inflation. As an 85% MA pure-play, this fundamentally pressures margins and drives projected 2025 membership decline. While at a historical support zone, analyst targets have been sharply lowered to approximately $225 from around $300. Forthcoming Q4 2025 earnings and 2026 guidance, due February 11, face this considerable regulatory headwind.
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How Do HUM Financials Look Right Now?
- Revenue Growth: 9.9% LTM and 11.4% last 3-year average.
- Cash Generation: Nearly 1.2% free cash flow margin and 0.0% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in the last 3 years for HUM was 9.9%.
- Valuation: HUM stock trades at a PE multiple of 18.1
| HUM | S&P Median | |
|---|---|---|
| Sector | Health Care | – |
| Industry | Managed Health Care | – |
| PE Ratio | 18.1 | 24.1 |
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| LTM* Revenue Growth | 9.9% | 6.2% |
| 3Y Average Annual Revenue Growth | 11.4% | 5.6% |
| Min Annual Revenue Growth Last 3Y | 9.9% | 0.2% |
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| LTM* Operating Margin | � | 18.8% |
| 3Y Average Operating Margin | � | 18.4% |
| LTM* Free Cash Flow Margin | 1.2% | 13.5% |
*LTM: Last Twelve Months | For more details on HUM fundamentals, read Buy or Sell HUM Stock.
And What If The Support Breaks?
HUM isn’t immune to big drops, even with strong fundamentals. It fell about 77% during the Dot-Com bubble and hit nearly 78% in the Global Financial Crisis. More recently, the 2018 correction took it down 34%, and the Covid pandemic wiped out around 44%. The Inflation Shock caused a smaller dip near 24%. So, while quality counts, HUM still faces major selloffs when markets turn sour.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read HUM Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
Still not sure about HUM stock? Consider the portfolio approach.
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