Humana cut to Hold at Argus on higher medical costs

As previously reported, Argus analyst David Toung downgraded Humana to Hold from Buy with no price target. The company is facing margin pressure as a post-COVID recovery in procedural volume pushes medical costs higher, with the recent 8-K filing this week indicating that the medical cost ratio, or MCR, in its Insurance segment will be at the high end of its full-year guidance range of 86.3%-87.3%, the analyst tells investors in a research note. The firm adds that the rising utilization should continue for at least the next six months, raising the MCR and lowering margins, also cutting its FY23 EPS view by 5c to $28.10 and its FY24 view by 10c to $31.80.