Will Humana Stock Rebound After A Large Fall Last Week?

The stock of Humana (NYSE:HUM) has seen a large fall of 17% over the last month, while it was down around 22% last week.  HUM stock rose from levels of around $390 in early October 2021 to levels of around $470 toward the end of the year, before falling to levels of $363 currently. This recent fall can be attributed to the company’s revised outlook, cutting its 2022 forecast for Medicare membership growth by about half from 325K to 375K members earlier to 150K to 200K members. The company now expects its EPS to grow toward the lower end of its earlier provided growth range of 11% to 15%. Humana is facing challenges in retaining its clientele with higher than anticipated terminations during the 2022 enrollment window. The company’s management cited increased competition to be the reason for the rise in terminations. Following this development, some of the Wall Street analysts also raised concerns on the outlook for the company, further weighing on HUM stock.

But now that HUM stock is down a large 17% in a month, will it continue its downward trajectory, or is a rebound imminent? Such a large move for HUM stock is uncommon and it has occurred only 20 times over the last ten years. Nevertheless, going by historical performance, there is a very high chance of a rise in HUM stock over the next monthOut of 20 instances in the last ten years that HUM stock saw a twenty-one day fall of 17% or more, all 20 of them resulted in HUM stock rising over the subsequent one month period (twenty-one trading days). This historical pattern reflects a very high chance of a rise in HUM stock over the next month. See our analysis on Humana Stock Chance of A Rise for more details.

While HUM stock may see higher levels over the next month, it is helpful to see how its peers stack up. Check out Humana Stock Comparison With Peers to see how HUM stock compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.

Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using last ten years data

  • After moving -21.7% or more over a five-day period, the stock rose in the next five days on 50% of the occasions.
  • After moving -21.1% or more over a ten-day period, the stock rose in the next ten days on 71% of the occasions
  • After moving -17.5% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 100% of the occasions.

This pattern suggests that there is an equal chance of a rise or a fall in HUM stock over the next five days, while it will likely see higher levels over the next ten days and one month period.

Humana (HUM) Stock Return (Recent) Comparison With Peers

  • Five-Day Return: CI highest at 1.5%; HUM lowest at -21.7%
  • Ten-Day Return: CI highest at 3.2%; HUM lowest at -21.1%
  • Twenty-One Days Return: CI highest at 11.9%; HUM lowest at -17.5%

While HUM stock can see a rebound, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Allegion vs Humana.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

 Returns Jan 2022
MTD [1]
YTD [1]
Total [2]
 HUM Return -22% -22% 78%
 S&P 500 Return -2% -2% 109%
 Trefis MS Portfolio Return -6% -6% 271%

[1] Month-to-date and year-to-date as of 1/10/2022
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market Beating Portfolios

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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