Humana Stock Swings Lower on Rebate Rule Concerns

The stock is pacing for its fourth straight loss

Deputy Editor
Feb 6, 2019 at 10:16 AM
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The shares of Humana Inc (NYSE:HUM) were up in pre-market trading, after the health insurance concern announced fourth-quarter profit and revenue that beat analysts' expectations, thanks to growth in Medicare Advantage plans. However, they quickly reversed course, now down 3.3%  at $293.26, after the company's chief financial officer said that the Trump administration's proposed rebate rule might mean higher premiums.

Although HUM is pacing for its fourth straight loss today, Humana stock is well off its early January nine-month low near $269. However, this rally stalled near the stock's 80-day moving average, with HUM now testing a 38.2% Fibonacci retracement of its January surge.

Analysts remain optimistic toward the stock. Twelve of the 15 brokerages following the equity gave it a "strong buy" or "buy" rating, while only has doled out a "hold," with not a single "sell" to be seen. What's more, the consensus 12-month target price of $367.81 sits in uncharted territory for the stock, and is a 25% premium to current levels. 

Options traders, meanwhile, have been bullish toward the stock, too. HUM sports a 50-day call/put volume ratio of 1.54 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 93rd percentile of its annual range. This indicates that calls have been bought over puts at a much quicker-than-usual clip.


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