Should you buy Humana shares after posting mixed FQ3 results?

On Wednesday, Humana Inc. (NYSE:HUM) shares edged slightly lower after reporting its fiscal third-quarter results. The company announced its most recent quarterly results before markets opened, beating analysts expectations on earnings. However, revenue for the quarter came short of estimates despite growing by more than 10%.

The company posted FQ3 non-GAAP earnings per share of $4.83, beating the average for analyst estimates of $4.67. On the other hand, its GAAP EPS of $11.84 outperformed the Street expectations by $7.29, while revenue for the period grew by 10.9% from the same period a year ago to $20.87 billion, $40 million below estimates.

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From an investment perspective, Humana shares trade at reasonable trailing 12-month and forward P/E ratios of about 24.16 and 18.64, respectively. Therefore, the stock could gain the attention of value investors.

Analysts expect Humana’s earnings per share to grow by 26% this year before rising at an annual rate of about 13.30% over the next five years. Therefore, growth investors could find it as a compelling option for their portfolios.

Technically, Humana shares seem to have recently pulled back from an ascending channel formation, before falling towards the 100-day moving average. However, with shares still far from dropping to oversold conditions, the current decline seems poised to continue.

Therefore, investors could target extended pullbacks at about $443.07, or lower at $430.98. On the other hand, $469.95 and $481.48 are crucial resistance zones.

Not time to buy yet

In summary, although Humana shares have recently pulled back, the stock is far from reaching oversold conditions, thus leaving room for more downward movement.

In addition, with Wednesday’s Q3 results failing to rally the stock amid reasonable valuation multiples, investors could be best placed to wait for the share price to retest the current support levels before buying.

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