Humana price target lowered to $280 from $330 at BofA

BofA analyst Kevin Fischbeck lowered the firm’s price target on Humana (HUM) to $280 from $330 and keeps a Neutral rating on the shares. After having analyzed over 138,000 Medicare Advantage plans and county-level membership to assess total addressable market growth by Managed Care Organization, the firm said that “for the first time in our memory,” TAM decreased for all the large MCOs, with MCOs for the most part having exited PPO plans where medical management is more difficult to achieve. Of note, Humana added PPO plans in what appears to be an effort to diversify its plans to reduce stars concentration risk, but the firm lowered its target given the potential that this means Humana grows faster than average and gets adverse selection, including 2%-plus growth from membership that UnitedHealth (UNH) is exiting, the analyst tells investors.