Will Humana stock rebound after a significant drop last week?
The stock of Humana saw a sharp drop of 17% over the past month, down from around 22% last week. HUM stock rose from levels of around $ 390 in early October 2021 to levels of around $ 470 towards the end of the year, before falling back to levels of currently $ 363. This recent drop can be attributed to the company’s revised outlook, halving its Medicare membership growth forecast for 2022, from 325,000 to 375,000 members earlier to 150,000 to 200,000 members. The company now expects its EPS to increase towards the lower end of its previously provided growth range of 11% to 15%. Humana faces challenges in retaining customer loyalty with higher than expected terminations during the 2022 enrollment window. Company management cited increased competition as the reason for the increase in layoffs. Following the move, some Wall Street analysts have also raised concerns about the company’s outlook, weighing more on HUM stock.
But now that HUM stock is down 17% in one month, will it continue on its downward trajectory or is a rebound imminent? Such a large move for HUM stocks is rare and has only happened 20 times in the past ten years. However, based on historical performance, there is a very high probability of an increase in the stock of HUM over the next month. In 20 cases over the past ten years, HUM stock has fallen 17% or more in twenty-one days, every 20 resulted in an increase in the stock of HUM during the next month period (twenty-one trading days). This historic trend reflects a very high probability of a rise in HUM stock over the next month. See our analysis on Humana Stock Chance of a rise for more details.
While the HUM stock may see higher levels over the next month or so, it’s helpful to see how its peers stack up. To verify Comparison of Humana actions with peers to see how the HUM share stacks up against its peers on the metrics that matter. You can find other useful comparisons at Peer comparisons.
Calculation of “probability of event” and “chance of increase” using data from the last ten years
- After changing -21.7% or more over a five-day period, the stock rose over the next five days in 50% of cases.
- After fluctuating -21.1% or more over a ten day period, the stock rose over the next ten days 71% of the time
- After changing -17.5% or more over a twenty-one day period, the stock rose over the next twenty-one days in 100% of cases.
This pattern suggests that there is an equal chance of a rise or fall in the stock of HUM over the next five days, while it will likely experience higher levels over the next ten days and a month. .
Comparison of the performance of Humana shares (recent) with peers
- Five-day return: highest CI at 1.5%; Lowest HUM at -21.7%
- Ten-day yield: highest CI at 3.2%; Lowest HUM at -21.1%
- Twenty-one day return: highest CI at 11.9%; Lowest HUM at -17.5%
While HUM stock may rebound, the Covid-19 crisis has created many price discontinuities that may offer attractive trading opportunities. For example, you will be surprised at how counterintuitive stock valuation is for Allegion Against Humana.
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