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 PANTHERx Rare to a consortium of The Vistria Group, General Atlantic, and Nautic Partners. This represents the proactiveness of the company in upgrading its portfolio for value maintenance.
CNC’s total revenues for the first quarter, ended March 31, 2022, came in at $37.19 billion, up 24% year-over-year. Its net earnings were $849 million, up 21.5% year-over-year. Furthermore, its EPS was $1.44, up 21% year-over-year.
For its fiscal year 2022, analysts expect CNC’s revenue to increase 12.3% year-over-year to $141.46 billion. Its EPS is estimated to grow 14.6% to $6.29 in 2023. In addition, it has surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has declined marginally in price year-to-date to close yesterday’s trading session at $81.77.
CNC has an overall A rating, which indicates a Strong Buy in our proprietary rating system. It has an A grade for Growth and a B grade for Value and Sentiment. Within the Medical - Health Insurance industry, it is ranked #4. Click here to see the additional POWR Ratings for Momentum, Stability, and Quality for CNC.
Molina Healthcare, Inc. (MOH)
MOH provides managed health care services to low-income families and individuals under the Medicaid and Medicare programs and state insurance marketplaces. It operates in four segments–Medicaid; Medicare; Marketplace; and Other. The Long Beach, Calif., company has served approximately 5.2 million members.
On April 27, 2022, President and CEO Joseph Zubretsky said, “We are maintaining strong momentum across each dimension of our strategy by delivering high-quality health care for members, achieving meaningful top-line growth, and producing attractive margins. The company’s performance continues to validate our long-term strategy and its value creation potential.”
For the first quarter, ended March 31, 2022, MOH’s total revenue came in at $7.77 billion, up 19.1% year-over-year. Its adjusted net income was $288 million, up 10.8% year-over-year, while its adjusted EPS came in at $4.90, up 10.4% year-over-year.
MOH’s revenue is expected to increase 9.5% to $30.41 billion in 2022. Its EPS is expected to rise 47.7% to $4.18 for the quarter ending Sept. 30, 2022. It surpassed EPS estimates in each of the four trailing quarters. The stock has declined 4.4% year-to-date to close yesterday’s session at $304.00.
MOH’s POWR Ratings reflect its promising outlook. It has an overall A rating representing a Strong Buy in our POWR Ratings system.
MOH has an A grade for Quality and a B grade for Value. It is ranked #6 in the Medical - Health Insurance industry. Click here to see the additional POWR Ratings for MOH (Growth, Momentum, Stability, and Sentiment).
Anthem, Inc. (ANTM)
ANTM and its subsidiaries operate as a health benefits company in the United States. It operates through four segments: Commercial & Specialty Business; Government Business; IngenioRx; and Other. ANTM is headquartered in Indianapolis, Ind.
On January 26, 2022, President and CEO Gail K. Boudreaux said, “Anthem is uniquely positioned to achieve our purpose of improving the health of humanity thanks to our 98,000 dedicated employees and their unwavering commitment to the customers and communities we serve.”
For its fiscal fourth quarter, ended Dec. 31, 2021, ANTM’s total operating revenue came in at $36.02 billion, up 14.2% year-over-year. Its net income was $1.13 billion, up 104.2% year-over-year, while its EPS increased 111.4% year-over-year to $4.63.
ANTM’s revenue is expected to increase 12.2% year-over-year to $153.60 billion in 2022. Its EPS is estimated to increase 13.4% to $32.45 in 2023. It surpassed EPS estimates in each of the trailing four quarters. The stock has gained 2.8% in price year-to-date to close yesterday’s session at $476.39.
ANTM has an overall A grade, which equates to a Strong Buy in our POWR Ratings system. It has a B grade for Growth, Value, Stability, Sentiment, and Quality. It is ranked first in the Medical - Health Insurance industry. Click here to see Momentum ratings for ANTM.
HUM shares were trading at $425.43 per share on Thursday afternoon, up $5.39 (+1.28%). Year-to-date, HUM has declined -8.12%, versus a -17.08% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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