Investors need to do lots of work to determine which stock is worth staking their money on. Fortunately, more often than not, they can consider analysts’ opinions about different futures. Goldman Sachs is one of those investors that provides a rating along with some analysis to help business people see the potential of some shares or warn them away from others.
Health insurance company Humana got a strong-buy rating from Wall Street recently. It is currently on track for serious gains. Goldman Sachs’ analyst Robert Jones then set his price target at $510 for the stock. If the target is met, Humana will gain 31% in the next year.
Wall Street analysts agree with Jones. But, the average price target is $435.50 per share with a 12% upside potential.
What makes this company a good choice?
Goldman Sachs’ analysts noted that Humana’s mix of business, along with its sheer size, makes the company a stand-out. According to Robert Jones, Humana’s scale, brand reputation, and infrastructure will enable the stock to continue gaining its share in the fastest-growing vertical of managed care.
Humana has recently faced newer entrants in the Medicare Advantage (MA) market. Furthermore, continued growth in this end-market can have a more pronounced impact on the company’s bottom line versus other managed care organizations considering Humana’s more concentrated exposure to MA.
Furthermore, Humana has opened senior-focused and payor-agnostic primary care centers as part of its approach. The company has an excellent primary care strategy. There are 260 centers so far, but Humana has stated that another 35 will open in 2020.
Fortunately, these centers could help the company recruit and retain MA members, along with recognizing long-term EBITDA growth from the providers and increasing the profitability of the managed members under these value-based arrangements. Overall, Humana’s primary care strategy could be a significant growth point for the company.
Analysts considered the possibility of stronger growth and retention and improved member profitability as the most meaningful impact. They are advising people to go for this stock.