Humana Stock Could Reach New Heights

The security is already up 50% year-over-year

Digital Content Manager
Sep 4, 2020 at 2:47 PM
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The shares of Humana Inc (NYSE: HUM) are down 1.9% to trade at $413.57 at last check, cooling off just a day after hitting a record high of $431.12. And while the security is already enjoying an impressive 50.7% year-over-year lead, with support from the 60-day moving average, more upside may soon be on the horizon thanks to historically low implied volatility (IV) -- which amid a record high on the charts -- has been a bullish combination for Humana stock in the past.

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been three other times in the past five years when the stock was trading within 2% of a 52-week high, while its Schaeffer's Volatility Index (SVI) sat in the 20th percentile of its annual range or lower -- as is the case with HUM's current SVI of 33.9%, which sits in the 16th percentile of its 12-month range. The data shows the security was higher a month later, averaging a return of roughly 7% for that time period. From its current perch, a move of similar magnitude would put HUM just above the $442 mark, at yet another record peak.

HUM

Analysts are majorly optimistic toward the healthcare stock, with 12 of the 16 in coverage sporting a "buy" o better rating, and the remaining four carrying a tepid "hold." Meanwhile, the stock's 12-month consensus target price of $446.67 is a 8.1% premium to its current perch.

What's more, the stock's Schaeffer's Volatility Scorecard (SVS) sits at 73 out of 100. This means HUM has tended to exceed option traders' volatility expectations during the past year -- a boon for option buyers.

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