Goldman’s Stephen Tanal and JPMorgan’s Gary Taylor are bullish on Humana’s (NYSE:HUM) growth prospects on the basis of the expected permanent repeal of the health insurance tax (HIT) associated with the Affordable Care Act (ACA). Mr. Tanal has raised his price target to $425 (17% upside) from $397 and raised in non-GAAP EPS target ~10% to $24.10. Mr. Taylor has raised his price target to $448 from $437 and maintains his “Top Pick” tag on the stock.
The tax on providers, enacted by the Obama administration, was intended to subsidize the cost of insurance for uninsured families and individuals. Companies have been lobbying to kill the tax for years since they have had to absorb part of the expense in order to remain competitive in the Medicare Advantage market.
In its year-end spending deal, Congress appears ready to do just that (the House passed the package on Tuesday, December 31). If the Senate goes along, a virtual certainty, the tax would be repealed in 2021.
In 2018, UnitedHealth Group (NYSE:UNH) paid $2.60B, the highest HIT tab, followed by Anthem (NYSE:ANTM) ($1.54B), Humana ($1.04B) and Centene (NYSE:CNC) ($709M).
