Long Trade Idea
Enter your long position between $191.39 (the lower band of its horizontal support zone) and $206.87 (the upper band of its horizontal support zone).
Market Index Analysis
- Humana (HUM) is a member of the S&P 500 Index.
- This index trades near record highs but decreasing bullish trading volumes offer a severe warning about the health of the rally.
- The Bull Bear Power Indicator of the S&P 500 is bullish with a negative divergence and does not confirm the uptrend.
Market Sentiment Analysis
Equity futures are mixed this morning as big tech is pushing and pulling markets in both directions. Meta Platforms surged as much as 10% in after-market trading, while Microsoft plunged by over 7%. Apple will report after the bell, and markets also await earnings from Mastercard and American Express, which could provide a snapshot of consumer health and spending. The US Fed kept interest rates on hold as expected. Still, gold and silver continue to rally as safe-haven assets, alongside the Swiss Franc, as investors hedge against further geopolitical and economic risks.
Humana Fundamental Analysis
Humana is a health insurance company, the highest-ranked Kentucky company by revenues, and the fourth-largest US health insurance provider. It also manages TRICARE, a health care program of the US Department of Defense.
So, why am I bullish on HUM despite its two-day plunge?
The two-day plunge to 52-week lows was due to the surprise proposed 0.09% increase in Medicare Advantage payments for 2027. Still, I turned bullish on Humana amid robust 25% annualized profit growth, superb profit margins, and the likelihood that up to 90% of members return to 4-star plans. I am also bullish on the potential that Humana may spin off or partner with private equity on its CenterWell primary care unit. Interest from institutional investors is high, providing a floor under the sell-off from current levels, and I am cautiously bullish on a solid outlook after its earnings release.
Metric | Value | Verdict |
P/E Ratio | 18.15 | Bullish |
P/B Ratio | 1.35 | Bullish |
PEG Ratio | 0.90 | Bullish |
Current Ratio | 2.02 | Bullish |
ROIC-WACC Ratio | Positive | Bullish |
The price-to-earning (P/E) ratio of 18.15 makes HUM an inexpensive stock. By comparison, the P/E ratio for the S&P 500 is 31.52.
The average analyst price target for HUM is $286.62. This suggests excellent upside potential with decreasing downside risks.
Humana Technical Analysis
Today’s HUM Signal
- The HUM D1 chart shows price action forming a fresh horizontal support zone.
- It also shows price action between its descending 0.0% and 38.2% Fibonacci Retracement Fan levels.
- The Bull Bear Power Indicator is bearish but shows signs of a capitulation sell-off.
- The average bearish trading volumes are higher than the average bullish trading volumes but have reached levels suggesting the sellers are nearly flushed out.
- HUM plunged as the S&P 500 Index pushed to fresh records, a significant bearish trading signal, but bullish signs have begun to emerge.
My HUM Long Stock Trade
- HUM Entry Level: Between $191.39 and $206.87
- HUM Take Profit: Between $269.09 and $286.62
- HUM Stop Loss: Between $172.73 and $181.82
- Risk/Reward Ratio: 4.16