The demand for health insurance policies has hit record highs in the post-pandemic era. According to The Department of Health and Human Services (HHS), the Affordable Care Act insurance policy’s enrollees stood…
at 35.80 million people in early 2022, up 32.1% since 2020. Furthermore, HHS recently declared more convenient, affordable, and improved policies soon to be implemented for a better consumer experience.
In addition, several organizations now realize the necessity for health insurance for their employees amid rising health awareness. According to Research and Markets, the U.S. Health Insurance Market is estimated to grow at a 10.2% CAGR from 2022 to 2027.
Given this backdrop, we think fundamentally strong health insurance stocks Humana Inc. (HUM), Cigna Corporation (CI), Centene Corporation (CNC), Molina Healthcare, Inc. (MOH), and Anthem, Inc. (ANTM) are solid bets now. These stocks have outperformed the benchmark S&P 500 index so far this year and have a ‘Strong Buy’ rating in our proprietary POWR Ratings system.
Humana Inc. (HUM)
HUM in Louisville, Ky., and its subsidiaries operate as a health and well-being company in the United States. It operates through three segments: Retail; Group and Specialty; and Healthcare Services. The company offers medical and supplemental benefit plans to individuals.
On April 27, 2022, Bruce D. Broussard, HUM’s President and CEO, said, “The $1 billion value creation initiative we introduced last quarter is developing as expected, creating capacity to further enhance our Medicare offerings and expand our Healthcare Services capabilities.”
For the first quarter, ended March 31, 2022, HUM’s total revenues increased 16% year-over-year to $23.97 billion. Its net income came in at $930 million, up 12.3% year-over-year, while its EPS was $7.29, up 14.1% year-over-year.
Analysts expect HUM’s revenue to be $93.06 billion in 2022, representing an 11.6% year-over-year increase. The company’s EPS is expected to rise 29.8% to $6.27 for the quarter ending Sept. 30, 2022. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has declined 9.5% in price year-to-date to close yesterday’s trading session at $420.04.
HUM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
HUM has a B grade for Growth, Value, Sentiment, and Quality. It is ranked #5 of 11 stocks within the A-rated Medical – Health Insurance industry. Click here to see the additional POWR Ratings for HUM (Momentum and Stability).
Cigna Corporation (CI)
Bloomfield, Conn.-based CI provides insurance and related products and services in the United States. Its segments are Evernorth and Cigna Healthcare. The company also offers permanent insurance contracts sold to corporations to provide coverage on the lives of certain employees for financing employer-paid future benefit obligations. It distributes its products and services through insurance brokers and consultants.
On May 6, 2022, Chairman and CEO David M. Cordani said, “We’re taking decisive steps forward with innovation, new partnerships, and re-investing in our company so we can achieve greater impact for the customers and communities we’re privileged to serve.”
CI’s adjusted revenues increased 7.6% year-over-year to $44.11 billion for the first quarter ended March 31, 2022. Its adjusted income from operations came in at $1.93 billion, up 16% year-over-year. Also, its adjusted EPS came in at $6.01, up 27% year-over-year.
Analysts expect CI’s revenue to increase 4.9% year-over-year to $187.51 billion in 2023. Its EPS is estimated to grow 11.2% per annum for the next five years. It has surpassed EPS estimates in each of the trailing four quarters. And the stock has gained 12.2% in price year-to-date to close yesterday’s trading session at $257.57.
CI has an overall A rating, which indicates a Strong Buy in our proprietary rating system. It has a B grade for Growth, Value, Stability, Sentiment, and Quality. Within the Medical – Health Insurance industry, CI is ranked #3. Click here to see the additional POWR Ratings for Momentum for CI.
Centene Corporation (CNC)
CNC in St, Louis, Mo., operates as a multinational healthcare enterprise that provides programs and services to underinsured and uninsured individuals in the United States. Its segments include Managed Care and Specialty Services.
On May 5, 2022, CNC announced its agreement to sell Magellan Rx to Prime Therapeutics LLC (Prime) and another final agreement to sell…
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