Boy was I wrong when I wrote that momentum stocks would rise again at the end of March. Since that article ran on March 29, the iShares MSCI USA Momentum Factor ETF (MTUM) has fallen 1.7%, while the SPDR S&P 500 ETF (SPY) has gained 0.2%. But there’s one part of that column I’m feeling o.k. about–Humana (HUM).
Now, Humana is not generally thought of as a momentum stock, but when I wrote that column it had been exactly that–one of the best performing stocks of the past year. It had a tough time during the momentum meltdown–Humana’s shares had dropped 2.6%–but its jumped after releasing earnings today and Humana has now gained 3.7%.
How good were Humana’s earnings? Humana reported a profit of $2.35 a share, beating forecasts for $1.94, on sales of $11.71 billion, topping the Street consensus for $11.52 billion. Cantor Fitzgerald’s Joseph D. France digs in:
Humana reported substantially better-than-expected 1Q:14 results, largely because utilization remains low, although $297 million of favorable development also helped…We expected that the chief headwinds in 2014 would be tough comparisons with favorable development, which as at record levels in 2013, and higher utilization, but there is little evidence of either so far…Management did not raise earnings guidance, but it did raise the enrollment outlook, and we expect the new business development and startup costs that weighed on the company in 1Q:14 will moderate over the balance of the year.
Shares of Humana have gained 6.5% to $116.92 at 3:08 p.m., and its big gain has helped boost competitors like UnitedHealth (UNH), which has risen 3.3% to $77.71, and Aetna (AET), which has advanced 2.3% to $73.70.
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