HUM Stock's Rally Isn't Over Yet, If History is Any Indicator

The stock has a 100% positive return rate for the month of August during the past 10 years

Digital Content Manager
Jul 31, 2019 at 11:48 AM
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Heathcare concern Humana Inc (NYSE:HUM) hit a new five-month high of $301.86 earlier today, and is now trading up 4.3% at $296.67, pacing for its fourth straight win. This comes after the firm posted second-quarter earnings of $6.05 per share on $16.25 billion in revenue, both of which beat analysts estimates, and lifted its full-year forecast, citing its strengthening Medicare Advantage plans. Separately, Humana said it would be initiating a $1 billion accelerated share repurchase plan after the close today. 

Right now, the equity is up almost 12% this month, and should these gains hold through the end of today, HUM is expected to clock its best month since January 2018. The shares could head even higher in the near term, too, if history is any indicator. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, HUM stock has finished the month of August higher every single time during the last 10 years -- the only stock on the list to do so -- averaging a 6% gain. Based on its current perch, a similar move would put the stock right atop the $314 region for the first time this year. 

While analysts are already leaning bullish on HUM, there's still room for upgrades and/or price-target hikes to help propel the stock higher, with four "hold" ratings still out there. Plus, the consensus 12-month target price of $315.35 is a slim 7% premium to current levels. 

Options traders have been a bit more active today, with 2,326 calls and 2,465 puts on the tape so far, roughly four times what's typically seen at this point. The November 280 put is the most popular, and appears to be tied to stock. The weekly 8/2 300-strike call is getting some attention, too, with a chunk of these contracts being bought to open

More broadly, puts have slightly outnumbered calls on the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) over the past 10 days. What's more, the stock's 10-day put/call volume ratio of 1.24 sits higher than 82% of all other readings from this past year, indicating a healthier appetite for put buying relative to call buying of late. 

hum stock daily price chart on july 31

 

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